THE YEAR IN AGRICULTURE

REPORT OF THE SECRETARY OF AGRICULTURE TO THE PRESIDENT OF THE UNITED STATES, WASHINGTON, NOVEMBER 10, 1936

PROGRESS OF FARM RECOVERY

Four years ago American agriculture was in the depths of depression. Though farm commodity prices had dropped to nearly 50 percent below the pre-war average, the prices of the goods and services that farmers usually buy were at or above the pre-war level. This disparity was a cause of widespread agricultural ruin. Farm bankruptcies were at record heights, dispossessed farmers joined the urban unemployed, and farmers still struggling could not make ends meet. There was a tremendous surplus of farm products; yet consumers were suffering scarcity. Falling farm prices did not help them much, because their incomes were falling too as a result of declining trade and employment. The whole economic system was out of balance.

Since then conditions have changed for the better. The improvement has come about in the manner envisioned in 19383—through agricultural-price recovery with resulting increased demand for city goods. Net farm income this year will be three times that in 1933.  All groups of farmers and all agricultural regions have participated in the recovery, though not to the same degree. There is still distress in some regions, as a result of drought in 1934 and again this year.  On the whole, however, agriculture is out of the red and making progress toward financial rehabilitation.

This improvement has not been accomplished at the expense of other economic groups. On the contrary, it has promoted their welfare. Consumer buying power has risen with farm incomes, and the average employed wage earner can buy more food today than he could at the peak of urban prosperity in 1929. Food prices are still 15 to 20 percent below the predepression level. In spite of two great droughts in 8 years the total food supply for the current marketing season will be within 1 or 2 percent of what it was in 1935-36. Meat production is below normal requirements; but the output of some other products has increased, and exports are relatively low. Hence the national average per-capita consumption of foods has shown little change. Industrial production is 80 percent above the low point of 1932.  In short, the economic system has moved toward balance, with larger incomes in both town and country, and with profits replacing deficits in both farm and city balance sheets.

Farm recovery began in 1933 promptly after the adoption of a national farm-readjustment program, accompanied by revaluation of the dollar. As the farm income rose, farmers started clearing off their debts and taxes. They recommenced buying industrial goods. Recovery went on at a faster pace in 1934, 1935, and 1936, despite the handicap of drought. Between 1932 and the end of 1934 shipments of industrial goods to agricultural areas increased nearly 43 percent, and shipment of goods used in farm production increased 75 percent.  New-car registrations in agricultural States in the first half of 1935 were 147 percent larger than in the first half of 1933. Farmers were not monopolizing the benefits of farm recovery but were diffusing it throughout the country and putting life blood into business. What nonfarmers had contributed in processing taxes and benefit payments they got back with interest. Reciprocally the revival of urban trade benefited agriculture, and the whole economic picture brightened.

THE PRODUCTION CONTROL PROGRAMS

In the early stages of the farm recovery, the production of farm commodities had to be restricted so as to reduce the surpluses that were not moving into foreign markets. When drought in 1934 and again this year reduced production too drastically, some people questioned the logic of crop adjustment. Scarcity, however, was never intended and never approached. This country’s farm productivity is so tremendous that recovery from drought comes quickly. Full use of the available acreage normally means-surpluses. Agriculture produced as usual in the first years of the depression, while urban industry reduced its output by nearly 50 percent.

In bringing their production more nearly in line with demand, farmers were simply copying the behavior of other groups when faced with overproduction and declining markets; with the important difference, however, that only export surpluses came within the farm-reduction program. As soon as the demand improved, farmers increased their acreage and livestock breeding. Though drought in 1934 and 1936 kept the production from rising proportionately, it will rise eventually. Both the farmers and the present National Government aim at adequate production for domestic requirements, plus whatever additional supply can be sold profitably abroad.

Undoubtedly, most Americans want to maintain our agriculture on a proprietary, landowning, family basis. Certainly this Administration does. It is not desirable to have either a peasant agriculture manned by tenants and laborers, or a collective agriculture run by the central Government. This idea involves certain responsibilities. Farmers must be permitted to earn a profit, a margin of income over expenditures; otherwise the family farm becomes bankrupt, and either tenancy or Government farming supervenes.

But if agriculture is to be profitable, it must have prices sufficient on an average and in the long run to exceed its fixed charges and expenses of production; and this is impossible when supplies greatly exceed the effective demand. Those who object to the rational adjustment of the farm output to the farm demand practically take the position that farmers should produce, without regard for the reward obtainable, as long as anyone needs their crops. Needless to say, production on that basis cannot continue in any business, Profitable farming, in short, means farming adjusted to the available market. If want continues after that has been accomplished, the remedy is to create more buying power, rather than to compel farmers to produce indefinitely at a loss.

COMPARISON WITH INDUSTRIAL PRODUCTION

Farmers cannot be charged with having promoted scarcity when they readjusted their production for export more nearly in line with the available market. Index numbers of production and prices have been computed in this Department, with the 5 years 1925 to 1929 taken as 100. Farm production was 100 in 1930 and 106 in 1981, from which point it declined moderately to 90 in 1934 and 1935. Industrial production fell year by year after 1929 until it reached a low point of 56 in 1932. Thereafter it recovered gradually until in 1935 the index stood at 82, as compared with the farm production index of 90. It should be borne in mind that the industrial index includes the output of food manufacturers, an item which, of course, reflects farm production. Were this item excluded from the industrial index, the contrast between farm and factory production would be still more striking, Farm production remained high and farm prices relatively low until farm adjustment got under way. Industrial production and prices showed the reverse relationship.

Moreover, the farm situation in 1933 was such that reduced production would have come about eventually in any case, with or without Federal assistance. That is the typical end-product of low prices.  Usually, reduced production results from drastic competition and the elimination of the weaker producers. Concerted action after 1933 enabled the vast majority to survive. But this procedure did not reduce production more than it would have been reduced eventually by the other process, and it prevented deterioration of the agricultural plant through farm abandonment.

Looking back over the last 4 years, we can see that despite the droughts we have advanced toward balanced abundance. Four years ago our factories were producing below and our farms above consumer requirements, with both branches of production losing heavily. Today we have a forward movement in both town and country. Farm recovery has reanimated urban life without hurting any group. The disparity between urban and rural production has been substantially removed; likewise the disparity between farm and nonfarm prices. That the results have been beneficial everyone can testify from his own experience. Our higher national income, our increased employment, and the increase that has taken place in the money value of both agricultural and industrial assets show that recovery has been general.

FARM INCOME AND BUYING POWER

This Department makes available two series of farm-income statistics. One series records current receipts from sales plus A. A. A. payments, and the other shows the estimated gross income from the production. Farmers’ receipts from sales plus A. A. A. payments in 1936. will probably reach $7,850,000,000, or about 11 percent more than the corresponding receipts in 1935. This figure is 81 percent more than the cash farm income of 1932 and only 25 percent less than that of 1929. Table 1 shows the decline that took place from 1929 to 1932 and the subsequent steady recovery:

TABLE I.—Changes in income from 1929 to 1936-37
Calendar year Cash income from marketings Crop year Gross income*
1929 10,479,000,000 1929-30 $11,941,000,000
1930 8,451,000,000 1930-31 9,454,000,000
19315,899,000,0001931-326,968,000,000
19324,328,000,0001932-335,337,000,000
19335,117,000,0001933-346,406,000,000
19346,387,000,0001934-357,276,000,000
19357,090,000,0001935-368,508,000,000
1936 (preliminary)7,850,000,0001936-379,200,000,000

*Includes cash returns from calendar-year marketings of livestock, and from crop-year marketings of crops plus the farm value of production retained for use in the farm home. A. A.A benefit payments included in gross-income estimates as well as in the annual cash income service.

It will not be possible to indicate in detail the gross income from the farm production in 1936 until well along in 1937, when the marketings will be more nearly completed. It probably will approach $9,200,000,000, as compared with $8,508,000,000 from the production of 1935. It represents a total advance of about $3,900,000,000 or 72 percent, from the low point of 1932, but it is about $3,000,000,000, or 23 percent, below the ioe for 1929. Gross income in that year was 17 percent higher than in 1934-85 and 59 percent higher than in 1932-33. It was 71 percent of the 1929-30 total.

Net income remaining to farmers increased after 1933 proportionately more than the gross income because farm-commodity prices rose more than production expenses and other charges. After paying current production expenses, allowing for the depreciation of buildings and equipment and deducting rent, interest, taxes, and the wages of hired labor, the income available to farm operators for their labor, capital, and management from the production of 1935 was $4,538,000,000. This may be compared with $3,467,000,000 in 1934 and $1,492,000,000 in 1932. Whereas the increase in the gross income from 1934 to 1935 was only 17 percent, the increase in the income available to farm operators was 31 percent. It will be noticed that it was more than three times as large as in 1932. Moreover, much of the expenditures for production items in 1935 went for machinery, buildings, and repairs, which are in the nature of permanent improvements. Farmers’ expenditures for capital items in 1935 approximately equaled the estimated depreciation of their buildings and equipment, for the first time since 1930.

EXCHANGE VALUE OF FARM PRODUCTS

Another index of the farm position is the ratio between prices received and prices paid by farmers. Farm commodity prices have risen more since 1933 than the prices of nonfarm goods and services. Previously the trend had been in the opposite direction. In March 1933, with agricultural prices only 55 percent of the pre-war average, nonagricultural prices were still at 100 percent of the pre-war level. Farm products in 1935 averaged 108 percent of pre-war prices, while nonagricultural prices had risen to 125 percent. Farm prices had gained on nonfarm prices, but had not attained pre-war parity. This ratio indicates the exchange value of farm commodities or their unit purchasing power. The index of farm-commodity purchasing power was 55 percent of pre-war in March 1983, 73 percent for the year 1934, and 86 percent for the year 1935. By August 1936 it had climbed to 98 percent.

The purchasing power of farm commodities is not identical with the purchasing power of the farmer. It indicates what a given quantity of farm products will buy, but not what the total volume will command. A closer estimate of the farmer’s purchasing power can be derived from the ratio between the cash farm income and the prices that farmers have to pay for goods and services. With prices paid by farmers in 1936 equal to 80 percent of what they paid in 1929, the 1936 cash income of $7,850,000,000 is equivalent to $9,800,000,000 in terms of 1929 nonfarm prices. Otherwise stated, the purchasing power of the cash farm income in 1936 will be only 7 percent less than that of 1929. As compared with the purchasing power of the cash farm income in 1932 it represents an increase of 60 percent. Moreover, agricultural debt charges, taxes, and wage costs were lower in 1936. Allowance made for this additional factor would give an agricultural purchasing power still closer to that of 1929.

Certain aspects of the distribution of the farm income should be noticed. Cash income from meat animals in 1935 exceeded the corresponding figure for 1932 by 73 percent, and in the first 7 months of 1936 it advanced 27 percent over the total for the corresponding period of 1935. From dairy products in 1935 the cash income was 30 percent more than in 1932; the income from poultry and eggs was 45 percent more. These industries made small additional gains in the first 7 months of 1936. From grains the cash income in 1935 was 61 percent more than in 1932 and from cotton 46 percent more. Fruits and vegetables recorded a 41-percent gain. Income from marketings of all crops was 36 percent greater in the first 7 months of 1936 than in the corresponding period of 1935. These percentages do not include the A. A. A. payments.

   With marketings and benefit payments included, the total cash income from grains in 1935 was 133 percent larger than in 1932.  From cotton it was 77 percent larger. In the first 7 months of 1936 the total cash income from marketings with A. A. A. payments included was 17 percent more than in the corresponding period of 1935 though the A. A. A. payments were considerably smaller.

REGIONAL PERCENTAGES VARY

Regional percentages of gain in 1935 over 1932 range from 33 percent in the North Atlantic States to 81 percent in the South Atlantic States. Mainly the regional differences reflect the different price behavior of various commodities, but the aftermath of the 1934 drought was a factor also. Proportionately less gain for the dairy regions than for other regions was a natural consequence of the fact that the dairy regions had suffered less in the early years of the depression; but for the opposite reason the grain-growing areas show a relatively large increase, though reduced marketings have tended to offset the price gains.

Each of the principal agricultural regions, except the South Central States, showed an increase in income in the first 7 months of 1936, as compared with the corresponding period in 1935. In the South Central States, where smaller Government payments offset an increased return from marketings, the income was approximately the same. The gains in the other regions ranged from 14 percent in the North Atlantic, South Atlantic, and Western States to 23 percent in the West North Central States.

Accurately to measure the respective influences of the factors responsible for the recovery in farm incomes is difficult if not impossible. Mainly the improvement reflects price gains, supported by increased consumer buying power. Factors in the price gain include the revaluation of the dollar, the A. A. A. adjustment programs, the reduced production caused by the 1934 drought, and the liquidation of surpluses. In 1936 increased marketings were a factor in the income gain. Farm prices in the first 7 months of the year averaged slightly lower than in the corresponding months of 1935. In the later months, however, farm prices advanced as a result of the drought, and for the full year the farm-price average will probably exceed that of 1935.

In estimating the prospects for the longer future the most basic factor is the level of consumer incomes. Broadly, the income of agriculture varies more closely with the national income than with the level of farm prices. It is encouraging to note that the money income of the nonfarm population in August 1936 averaged 13 percent more than in August 1935 and 32 percent more than in the corresponding period of 1933. With their improved income, consumers were able to buy 7 percent more food and 12 percent more of the other items in their budget than in the previous year, but 6 and 11 percent, respectively, less of these items than in 1929. Earnings per employed worker have more than kept pace with food prices. Needless to say, farmers as a result of their income gains can deal more effectively with the consequences of the 1936 drought than they could with those of the drought of 1934.

FARM PRICES AND THE CONSUMER

Effects of the drought on the cost of living will probably be similar to those produced by the drought of 1934. From crop data available in September it was estimated that for the 1936-37 season food supplies in general will be about 3 percent below the 1935-36 level, about 1 percent below the level of 1934-35, and about 5 percent below the 1925-29 average. Certain vegetables, particularly potatoes, will be in short supply. The output of fruits and vegetables and of dairy products will be lower, and after the turn of the year the supply of meats will be reduced. This will result in higher meat prices to some extent offset by seasonal declines in other food prices. In the comparable situation after the 1934 drought, retail food prices as a whole in the first half of 1935 averaged about 11 percent higher than they did during the first half of 1934. Food constitutes only about one- third of total living costs, hence an increase of, say, 10 percent in the cost of food tends to produce a rise in total living costs of only about 3 percent.

Analysis of the trend in nonfarm income indicates that consumers’ incomes in the first half of 1937 will increase at least as much as the cost of living. In other words, the purchasing power of consumers generally, in terms of goods and services, will not decline. Had there Been no drought, it would have increased; and the foregoing remarks do not signify that consumers can regard with indifference the great change produced by the drought in the supply situation. But the main effect will be temporarily to arrest a gain rather than to cause a drop in the real income of consumers. Wage earners actually employed could buy with their wages more of the necessities of life in the summer of 1936 than they could in 1929 because retail prices were lower on the average. In terms of foods the purchasing power of employed workers actually advanced after 1929, when farm prices began falling. It remained above the 1929 level and reached a new high point in 1936.

In total purchasing power the position of city workers deteriorated during the first years of the depression. Pay rolls declined, while many nonfood items in the family budget remained unchanged. In 1934, 1935, and 1936, however, nonfarm labor incomes increased, These incomes for the first half of 1936 aggregated $23,492,000,000, as compared with $19,617,000,000 in the first half of 1933. ore men were engaged in manufacturing in the summer of 1936 than at any previous time in the last 5 years; in July industrial production was 108 percent of the 1923-25 average, the highest point reached since November 1929. According to the seasonally adjusted index of the Federal Reserve Board, the July industrial production was 83 percent above the low point to which it fell in March 1933. The relatively small rise in the cost of living which will be the inevitable consequence of the drought will be substantially offset by recovery in urban buying power.

OUR NATIONAL AGRICULTURAL POLICY

It is commonly believed that the United States never had a truly national agricultural policy until after the World War; but the country has always had a national agricultural policy. In the period of westward migration, of rapid land settlement, and of ruthless exploitation of natural resources, the policy was negative. It was mainly one of noninterference with the private appropriation of land for use or misuse. Despite its laissez-faire character, we cannot call that procedure a mere lack of policy. It expressed a definite philosophy and, indeed, a definite program. It was what the dominant forces in the country wanted and what the majority of the people at least tacitly accepted. Our national agricultural policy in the nineteenth century reflected the belief that national welfare could best be promoted through individualism and unrestricted competition.

For a long time this theory apparently stood the test of practice.  With abundant land, an open frontier, and a relatively sparse population, the quickest way to increase production, and therefore wealth, was to get the resources into private hands. Occasionally production overshot the market; but the resulting depression did not last long and did not shake the country’s faith in the exploitation program.  Various administrations encouraged farming, ranching, lumbering, and other land uses through homestead laws, grazing privileges, land grants, favors to transportation companies, lenient taxation, and irrigation. Few looked forward to the closing of the frontier and to the ruthless competition that would ensue. Most people seemed to think the policy that had been adopted could be continued indefinitely.

As a matter of fact, as most people now perceive, the exploitation policy created problems that today necessitate a conservation policy. Recklessness in one age inevitably imposes prudence on the next.  There are sharp contrasts between the agricultural views and pro- grams that dominated the nineteenth century and those that shape our agricultural policy today. But the contrast does not mean that the present has broken with the past or that tradition has been sharply wrenched from its natural path. On the contrary, it signifies that cause and effect have operated normally. The new agricultural policy is the direct result of the old one and of the conditions and problems which the old policy created. As the occupation of the continent proceeded, the expansion program ran out of material. It ran out of land and: forced the land hungry into submarginal farming, destructive grazing practices, and forest devastation. Land charges accumulated on the older-settled land and drove producers into overproduction. Exploitation, in short, created the need for conservation, and simultaneously excessive competition generated a need for corrective regulation. It is because our forbears went too far in one direction that we must now move in another.

NO BREAK WITH EVOLUTIONARY TREND

In the transition from the old to the new agricultural philosophy there is no sudden break with the evolutionary trend, and no capricious improvisation of new doctrine. On the contrary, the link between the old exploitation and the new conservation, and between the old unregulated competition and the new principle of cooperative adjustment, is direct and close. Perhaps the authors of the exploitation program, were they here today, would disown their offspring; but the parentage can be demonstrated. After the spendthrift has wasted his money he must begin to save; after a country has squandered its natural resources it must learn to husband what remains. Our national agricultural policy since the World War has been criticized as confused and uncoordinated, but study of it will reveal a logical and indeed predestined course.

Thus the Federal Farm Board came into existence to handle surpluses left by wartime and post-war expansion. The McNary-Haugen plan, though twice vetoed, stamped its mark on subsequent legislation as a first approach to the problem of the export surplus. The A. A. A. programs were an emergency effort to substitute concerted for haphazard crop adjustments in a catastrophically falling market and to bring agriculture abreast of urban industry in the regulation of production. The new Soil Conservation and Domestic Allotment Act, though weaker in crop-adjustment power than the measure it replaced, had the great merit of launching a positive attack on the dual problem of soil destruction and unbalanced cropping. In varying degrees all these approaches to the agricultural problem betokened a national recognition of the fact that modern oe cannot be solved by ancient formulas, and that agricultural policy today is necessarily in large measure the opposite of what it was in the period of the open frontier.

Agricultural policy draws its inspiration, not from the accidents of politics but from fundamental economic changes. In the shaping of American agricultural policy we can distinguish two great controlling forces, each of recent origin. First, of course, is the disappearance of the open frontier and the resulting pressure of population on the resources available with its threat of soil wastage and soil destruction. Second is the world-wide growth of economic regulation, not only in trade but in production. Governments are assuming greater and greater responsibilities for the regulation of commerce both domestic and foreign, and industry is becoming cartelized throughout the world. Into an economic system of that kind, a purely competitive, wholly unregulated agriculture will no longer fit.  These two great forces seem destined to exert an increasing influence which will express itself in legislation and policy no matter what political party may be in power. Modern agricultural policy in the United States is not the arbitrary invention of an economic group with a special interest to promote but is a national response to an altered economic world. It is not merely an attempt to deal with temporary evils but a profound readjustment to permanently changed conditions.

LANDMARKS IN AGRICULTURAL POLICY

It is interesting to recall the contribution of the past to present agricultural policy. In 1862 preside passed the Morrell Act, providing Federal grants of land to the States for the establishment of colleges in agriculture and the mechanic arts. After half a century of progress in agricultural technology, agriculture began to demand economic guidance. Accordingly, this Department developed extensive and varied economic services in which research was combined with the regular gathering of crop and market data, and with numerous related services such as commodity grading and standardization, and shipping- and receiving-point inspection. In 1921 these and other activities were concentrated in the Bureau of Agricultural Economics. In 1922 Congress passed the Capper-Volstead Act, giving legal recognition to the right of farmers to organize cooperative associations for the marketing of their products. In 1927 and again in 1928 Congress passed the McNary-Haugen legislation, though each time the legislation encountered a Presidential veto. Then came the Agricultural Marketing Act of 1929 and the creation of the Federal Farm Board. In 1933 the Agricultural Adjustment Act, with its provisions for processing taxes and cooperative crop adjustments, went into effect and remained in effect until the United States Supreme Court invalidated it in January last, through decisions in the Hoosac Mills and rice millers’ cases. Throughout the entire period covered by this brief review American farmers manifested an increasing tendency to effect organization and also to look to the Federal Government for aid in solving their economic problems.

Because of the adjustments made under the Agricultural Adjustment Act during the last 3 years and because the drought helped to liquidate certain of the surpluses, the present program under the Soil Conservation and Domestic Allotment Act is well fitted to present needs. Farmers recognize that, while this agricultural conservation program will be of immediate help in stabilizing supplies through the encouragement of more extensive uses of land, the program itself is not a direct production-control measure. A return to normal weather conditions would revive the problem of agricultural surpluses. I am inclined to believe that farmers understand what confronts them in the future and that they will look forward to making use of the method of meeting the problem of surpluses which the Supreme Court left open to them. The Soil Conservation and Domestic Allotment Act contains a provision which will facilitate this step in 1938 should farmers decide to meet their supply problem through cooperation of the States. This provision is, of course, the direct descendant of the invalidated Agricultural Adjustment Act, and preserves some of the ideas contained in that measure, as well as some of the principles developed in the application of the A. A. A. programs. It would be well, therefore, before examining methods and results under the new law, to glance back at the legacy bequeathed by the A. A. A.

AGRICULTURAL ADJUSTMENT ACT EFFECTIVE

It is evident, from the improvement that took place in the position of agriculture between 1932 and 1935, that the Agricultural Adjustment Act forwarded its main purpose, This was to eliminate the crushing surpluses that had piled up previously and to raise farm incomes immediately through various measures calculated to support prices. From 1932 to 1935, the period during which A. A. A. programs were in effect for cotton, wheat, tobacco, corn, and hogs, the combined farm cash income from these commodities increased 90 percent. Cash income from these five major commodities increased from $1,365,000,000 in 1932 to $2,593,000,000 in 1935. From all other farm products the cash income increased from $3,012,000,000 in 1932 to $4,307,000,000 in 1935. In 1932 the largest farm population in the Nation’s history had the smallest farm cash income reported in the 26 years for which records are available. The turning point came with the adoption of the Agricultural Adjustment Act, though this measure was only one of the factors responsible for the agricultural improvement. Dollar revaluation, business recovery, credit relief extended through the Federal Farm Credit Administration, and other influences contributed. All these influences combined gave farmers in 1935 a cash income available for living larger than in any year since 1929. They had to pay somewhat more for goods and services in 1935 than they did in 1932, but with allowance made for that, the purchasing power of the farm cash income in 1935 was still 35 percent larger than it had been in 1982.

   The great drought of 1934, which cut our production of feedstuffs in half, necessitated modifications in the A. A. A. program so as to encourage production of emergency feed crops that year and to pro- vide for certain increases in production the next.  It became advisable also to work toward a better coordination of the various commodity programs and to provide for greater regional and area differences so as to promote good farm management and good land use. Certain shortcomings had developed in the emergency application of the programs, notably a tendency to fix or freeze production in the historic mold, without proper regard for the changing requirements of different areas. But the crop-adjustment programs had shown themselves to be useful in promoting soil conservation and good farming. They fostered some shift from soil-depleting cash crops, such as cotton and wheat and corn, to soil-building crops such as grasses and legumes.

To strengthen and develop this favorable tendency, the A. A. A., working with the State experiment stations and with other branches of this Department, launched studies in regional planning and modified its crop-adjustment contracts with farmers. It began to place less emphasis on flat percentage changes in production and more on differential adjustments to the requirements of local as well as of national conditions. In this way the A. A. A. developed principles which found continued application when the invalidation of processing tax and production control provisions of the Agricultural Adjustment Act led Congress to pass the Soil Conservation and Domestic Allotment Act. Under the A. A. A. the primary objective was production control, with soil conservation a secondary though increasingly important object. Under the new law soil conservation becomes the primary aim, with some crop adjustments coming as a byproduct. Probably in a period of good crops and high yields the degree of crop control attainable under the new measure will not be adequate, but for the time being it works for a better crop balance, The emphasis it puts on grass and legumes has the double advantage of making our agricultural system less intensive, while at the same time conserving soil wealth.

METHODS UNDER NEW LAW

Under the Soil Conservation and Domestic Allotment Act the Federal Government in 1936 made grants to farmers cooperating in soil-conserving and soil-building programs.  It did not make use of contracts. Cooperating farmers simply planned their operations in line with definite soil-conservation standards, worked out with producers, soil specialists, and State agricultural leaders. They obtained their grants after officials had checked the performance with the standards. For this purpose Congress made $470,000,000 available for the year, the goal for which was to have 130,000,000 acres in soil-conserving crops as compared with 100,000,000 acres in 1930. Though the piveram for the year was national in scope, the country was divided for administrative purposes into five regions—the northeastern, the east central, the southern, the western, and the north central—and the practices for which payments were made and conditions which had to be met were varied so as to meet the particular needs of the farmers in each region.

After January 1, 1938, the program will enter upon a State-aid phase; in other words, the Federal Government thereafter will make soil-conservation grants, not directly to individual farmers, but to the States for distribution to cooperating farmers. The Soil Conservation and Domestic Allotment Act sets up five objectives:  Preservation of soil fertility, diminution of soil exploitation, promotion of the economic use of land, the protection of rivers and harbors against the results of soil erosion, and the attainment of parity income for agriculture. Power to promote the last-named object will not be available until the State-aid phase of the act goes into effect, but economists and farm-management specialists are already studying the means by which it may be used, provided it is needed.

Soil conservation and good farm management were important objectives under the A. A. A. programs. As experience showed the need, the A. A. A. modified its original requirements so as to give contracting farmers more scope in combining their various crop enterprises in harmony with the national crop-adjustment programs and more incentive to protect and restore soil values. In the north- central region, for example, from two-thirds to three-fourths of the acreage diverted from corn, wheat, cotton, and tobacco went into legumes and grasses. This diversion, though of a temporary nature, was a good beginning in cooperative soil conservation. It was the first large-scale effort to correct the bad effects of cropping practices developed in the wartime and post-war booms, when much land not suited to continuous intensive cultivation was brought under the plow. In the South, farmers were allowed to increase their acreage and production of food and feed crops, which meant an increase in the farm standard of living.

The necessity for soil-conserving practices was long overdue. Soil depletion had characterized American agriculture for decades, and the overcropping which took place during and after the World War made matters worse. Though the demand for farm products declined in the twenties, and though farmers had apparently a strong motive to alter their cropping systems, the acreage of cultivated, soil-depleting crops continued to increase. Burdened with debt and driven by low prices to seek compensation through more and more production, farmers kept on mining the soil. The A. A. A. enabled them to adopt a better course. With higher prices and benefit payments in view, they could begin to think of their permanent, as well as of their immediate, interest in the land and, to some extent, could stop selling the fertility of the soil piecemeal with the crops at low prices to foreign countries.

RESEARCH AND DEMONSTRATION AUTHORIZED

The soil problem received special recognition when Congress passed the Soil Conservation Act of 1935, which provided for a general program of research and demonstration to be conducted by the Soil Conservation Service in cooperation with the State experiment stations and with farmers. Broadened and amended after the Hoosac Mills decision, the measure evolved into the Soil Conservation and Domestic Allotment Act. This act recognizes a social as well as an individual interest in soil conservation and provides the individual farmer with means to advance both interests simultaneously. It facilitates a concerted effort to correct the grave mistakes that have been made in the past, and particularly since the World War, in the use of farm land.

Much of the land that came under the plow for the first time during and after the World War lies in the western Great Plains, and cannot be expected in normal circumstances to give profitable yields. Moreover, it is extremely subject to wind erosion. In the older cultivated regions, especially in the Corn Belt and South, there is heavy overcropping. In the Ce Belt, according to a report of the National Resources Board, overcropping is a major soils problem, particularly on the erosible land along the eastern edge of the sand hills, the plains of southern Nebraska, and the hilly areas of southern Iowa, northern Missouri, and western Illinois. Overcropping in this area is damaging more than 36,000,000 acres of farm land. Besides exposing the land to erosion, it is making soil harder to work, reducing the plant-food content and exposing land to increased danger of drought. Erosion and the drastic depletion of soil fertility due to overcropping are common throughout the South, and erosion is far from unknown in New England, even though much of the farm land is already in soil-conserving crops.

What is happening to farm lands throughout wide areas may be indicated by the results of experiments on the historic Morrow plots at the University of Illinois. One comparatively level plot which had been continuously in corn and oats for 23 years lost 4 tons of humus per acre, and yields steadily declined.  On another plot, on which corn, oats, and clover were rotated, and on which fertilizers were applied, the soil retained 14 tons more of organic matter per acre than did the soil of the corn-and-oats plot. Studies in Ohio revealed that during the last 60 years the adoption of better varieties, better seed, and scientific methods for the control of insects and plant pests merely balanced the downward trend in the average productivity of the soil. In other words, more than half a century of applied science showed no net gain because it did not include effective soil conservation. Comparable studies in Iowa demonstrated that present farm practices will not maintain the fertility of the soil and control erosion, and that in order to do so it will be necessary to reduce the corn acreage considerably. On rolling land the major problem is soil washing. Land cropped continuously in corn, in soil tests at the University of Missouri, lost seven times as much soil as land planted to a rotation of corn, wheat, and clover, though the slope was only 4 percent. Land kept in bluegrass lost only one-sixtieth as much soil as that kept in continuous corn.

SOIL DEPLETION IN THE SOUTH

Because of the system of farming followed in the South, the soil has been greatly depleted. Southern farmers devote a larger percentage of their cropland to soil-depleting crops than do farmers in any other part of the country. In the nine States of the southern region, with the exception of Florida, the ratio of soil-depleting cropland to the total cropland ranges from 76 to 92 percent and averages approximately 80 percent. The large percentage of clean-tilled row crops is a heavy drain on soil resources. In acreage cotton and corn are the principal crops, though there is a considerable acreage of wheat in Oklahoma and Texas. Cotton and corn both leave the land comparatively bare in the winter and subject to soil erosion. The mild climate and the heavy rainfall aggravate the problem.

   In 1936 the nine States shifted about 13 million acres from soil-depleting commercial crops to soil-conserving noncommercial crops. This was more than 40 percent of the total acreage so diverted in the United States. Soil conservation in the South calls for a relatively large percentage of diversion. But the dense farm population and, in recent years, the low price of cotton have made the operation difficult. Eleven million people, or one-third of our farm population, live in the nine States included in the southern region.

Prior to 1936 this situation was alleviated to some extent by the agricultural adjustment programs, which embodied a number of soil-conserving features; and in 1934 and 1935 about 14 million acres normally in cotton was shifted to the production of food and feed crops, and to crops that conserve the soil. The acreage of soil-conserving crops in the South in 1936 was the largest on record.

In setting up the soil-conservation program in the western region it was necessary to take into consideration a great diversity of crops, of types of farming, and of farming practices. This region comprises Arizona, California, Colorado, Idaho, Kansas, Montana, New Mexico, Nevada, North Dakota, Oregon, Utah, Washington, and Wyoming. In the more humid areas the major problem is that of preventing erosion by water, while in the Great Plains erosion by wind demands attention. The so-called dry-land area requires special safeguards. Irrigation farming has its peculiar problems. In parts of Oregon, Washington, and northern Idaho summer fallowing enters into the system of farming and calls for appropriate conservation practices. In certain areas payments were made for contour cultivation, and particularly for contour listing, which tends to check erosion by both wind and water. Where wind erosion is serious, strip cropping and strip fallowing were encouraged. In three States payments were made for the use of lime or gypsum in soil building; and in States where noxious weeds are very prevalent, weed-control measures were regarded as a soil-building practice.

ORGANIZATION FOR THE PROGRAM

The organization set-up for carrying out this year’s program retained the principle of farmer cooperation, which had been developed under the A. A. A. programs in 1934 and 1935. As a coordinating body between the Federal Administration and local bodies there was established for each State a State agricultural conservation committee. This consisted of from three to five members, appointed from more or less distinct type-of-farming areas. The State committees generally exercised advisory and supervisory functions. They assumed the responsibility for checking the work of the county committees in establishing bases for supervising the checking of performance by cooperating farmers and for reviewing county expenditures and program disbursements. They were also responsible for the relative cost, operation, and the effectiveness of the programs.

Within the counties the organization was similar to that established under the earlier A. A. A. programs. Each county had its county and community committeemen, all of them farmers. These committeemen were elected by their neighbors in each township or other similarly defined area, to assist program participants in executing work sheets and in planning their farming operations in line with conservation standards. Also, the township committeemen helped, at the end of the season, to check performance and to certify the claims of cooperating farmers for Federal grants. Responsibility for supervising and coordinating the work of the various community committeemen, for reviewing program forms and documents, and for making final recommendations for the adjustment of individual “soil-depleting bases” within the prescribed limits for the county, rested with the county committee, which accordingly had authority to investigate local problems. Educational work necessary in the explanation and application of the programs was under the direction of the State agricultural extension services, which also were given large administrative duties in the West and South.

In determining an individual farmer’s contribution to the national soil-conservation goal and therefore establishing the amount of his claim upon the grant funds available the starting point was the soil-depleting base. Cropland uses were divided into two major classifications, soil-depleting and soil-conserving. Among the soil-depleting crops may be mentioned corn; small grains harvested for grain or hay, or seeded alone and pastured; annual grasses pastured or harvested for grain or hay; soybeans, cowpeas, and field beans if harvested for grain; the sorghums, potatoes, commercial truck and vegetable crops, sugar beets, tobacco, and cotton. In the soil-conserving category were included most of the legumes and perennial grasses; soybeans, field beans, cowpeas or field peas, if these crops were turned under as green manure; small-grain crops if turned under as green manure and followed by soil-conserving crops; orchards and vineyards interplanted with winter cover crops; acreages summer-fallowed if followed with soil-conserving crops. The two categories include many crops not here mentioned. Those cited merely illustrate the principle. After drought conditions developed in June and July, the Administration authorized many changes and additions to the crop classifications so as to meet the unexpected weather conditions.

For the farm owner or operator who planned to cooperate, the county committees established a general soil-depleting base, and in the South special bases were established for cotton, tobacco, and peanuts.  This base represented a normal acreage of the soil-depleting crops on the farm, with the total acreage serving as the starting point. The county limit was the ratio of the soil-depleting crop acreage to all farm land or to all cropland in the county. As representing the most normal period for the production of soil-depleting crops in recent years, the north-central region took 1932 and 1933 as the base years for establishing the county limits, the western and southern regions took 1928-32, and other regions adopted different base years. County committees notified farmers of their preliminary bases, but these were not necessarily final. Farmers had the right to appeal for reconsideration of their bases, first to the county committee and then to the State committee. This appeal procedure, besides being consistent with the democratic principle underlying the whole program, permitted the correction of unintentional errors. By taking all possible precautions to have the bases fairly established, the Administration hoped that they would prove satisfactory not only for the current year but for subsequent programs.

TWO CLASSES OF PAYMENTS

Farmers cooperating in the soil-conservation program could qualify in_1936 for either or both of two classes of payments, the class 1 or soil-conserving payment, and the class 2 or soil-building payments. The class 1 payment was available to farmers who diverted a portion of their soil-depleting base acreage to soil-conserving crops or uses. Farmers were eligible to receive this payment on any number of acres up to 15 percent of their general soil-depleting bases, up to 35 percent of their cotton bases, 30 percent of their tobacco bases, and 20 percent of their peanut bases. It was determined on a per-acre basis and averaged approximately $10 an acre for the entire country, varying quite widely, of course, with variations in the productivity of different counties and of different farms. Farmers desiring to qualify for the class 2 or soil-building payment had to adopt certain approved practices calculated to restore soil fertility.

These practices varied in different parts of the country but generally included new seedings of legumes and perennial grasses, seeding of soybeans, cowpeas, etc., for green manure, and applications of limestone. In certain dry areas farmers could qualify for small per-acre payments if they planted rye as a nurse crop for pasture grasses or if they strip-fallowed in such a way as to check wind erosion. In some areas payments were made for terracing. There was a top limit on the total amount of class 2 payments that a cooperating farmer might receive, which was generally the same number of dollars as there were acres of soil-conserving crops on cropland on his farm in 1936. Hence the larger the acreage of soil-conserving crops on the farm in 1936 the larger the soil-building allowance. A farmer could earn all or part of the allowance, in proportion to the extent to which he applied the recommended practices.

The farmer’s response to the agricultural-conservation program has been gratifying. Although the entire program had to be developed after the signing of the Soil Conservation and Domestic Allotment Act on February 29, more farmers applied for work sheets or asked for bases to be established than cooperated in the several commodity programs under the A. A. A. In general the cooperation was about the same as under the A. A. A. in those areas where corn, cotton, wheat, and tobacco were the major crops, and much greater in those areas where general and mixed farming is found, as, for example, in dairy regions like Wisconsin and New England and the mixed-farming sections in California. This, of course, was due to the fact that the new program was much more flexible than the old commodity programs, that it was better regionalized, and that each farm was considered as a unit.

As already indicated, the primary aim of the new program is the conservation and improvement of the soil, with crop control an incidental byproduct. With the move next year from a Federal to a State- aid basis, crop adjustment may become more important. When the States disburse the soil-conservation grants, soil conservation and crop adjustment may be combined legally. In fact, the two principles go naturally together. There was a steady growth of soil conservation under the original A. A. A. programs, and there should be a similar steady growth of crop control when the national program for soil conservation gets well advanced. For it is obvious that the shift from soil-depleting to soil-conserving crops answers not only the needs of the soil but also the needs of the permanent agricultural market.

The shift from soil-depleting crops, such as cotton, tobacco, and wheat, to soil-conserving crops, including primarily hay and forage, may go along with an increase in the animal enterprises commonly using the latter crops, particularly the beef and dairy enterprises. This tendency the present drought partially obscures.  An increase in the relative output of these two enterprises, particularly dairying, appears desirable from the national point of view. But it should be recognized that farmers in the major dairy areas have long followed farm practices and cropping systems of a soil-conserving and soil- building character. Care must be taken not to work a disadvantage upon them. This problem has been attacked by continued efforts to secure orderly and stabilized fiuid-milk markets through marketing agreements and orders, through the purchase of price-depressing temporary surpluses and their distribution through relief channels, and through the elimination of cattle infected with Bang’s disease and tuberculosis. In addition payment for practices of a soil-improving character enables these farmers to improve their pastures and hay lands.

LONG-TIME EFFECTS ON PRODUCTION

The present phase of drought-caused shortage can only be temporary. Under normal weather conditions our agricultural industry can oversupply its market, and the natural reaction from the present drought will be for it to do so. For the moment it may seem premature to talk again about overproduction, but experience proves that under blind competition one or two good crop years can pile up surpluses.

   It will be well to remember, when overproduction impends, that soil conservation alone is not a sufficient preventive. Soil-conservation practices tend to have more effect on output at first than they do later. In their early stages they reduce the average intensity of cultivation significantly, and therefore the tendency to oversupply the market. Eventually, however, they increase soil productivity; it is obvious, moreover, that less intensive cultivation of part of the farm area may promote more intensive cultivation of the remainder, particularly if the farm population is excessive. Unless the foreign as well as the domestic demand for American agricultural products revives, the rehabilitation of the soil through soil-conservation programs will combine with other factors in the agricultural situation to confront the country again in the near future with the absolute necessity of establishing a good adjustment between production and market requirements. Permanent agricultural policy should achieve soil conservation, consumer protection, and crop control together.

The transition from emergency crop adjustments to a more permanent program, with good land use and higher current incomes ranking equally as objectives, began in 1935, nearly a year before the Supreme Court decided the Hoosac Mills case. It started with a regional-research project undertaken by this Department in cooperation with the land-grant colleges and the State experiment stations.

Farm-management specialists had recognized that a shift toward less-intensive cropping, accompanied by soil conservation and soil building would reduce surpluses and at the same time lower the costs of production. They did not know, however, exactly what adjustments were necessary in cropping systems. Neither did they know what the effect of specific regional changes would be on total production. The research project sought light on these questions.

At the same time that it sought the advice of the experiment stations, the Department asked farmers for their recommendations.  It did so through a county-planning project, which was in full swing by the fall of 1936. Committees of farmers were formed in 2,500 agricultural counties throughout the United States. These committees offered opinions on the same questions that were asked of the experiment-station specialists. They estimated the county adjustments apparently necessary in crop and livestock systems to maintain soil fertility, control erosion, and promote more efficient farm management.

Specialists in the Department and in the State experiment stations are summarizing the results. The estimates of the farmers are being combined by type-of-farming areas, so that they may be compared directly with the estimates of the experiment station specialists. It will then be possible to arrive at final estimates which will command the agreement of both the farmers and the experiment station group. This year the farmers’ committees studied the apparent results of the soil-conservation program, and offered suggestions for its improvement.

This work with the farmers and the technical specialists reflects the Department’s recognition of the importance of drawing on the knowledge and experience of local groups in formulating national agricultural programs. Reliance on local interest and cooperation is more necessary now than ever, because the shift from crop control to soil conservation enhances the importance of local knowledge and local action.. There was considerable decentralization of administrative responsibility under the original A. A. A. programs. There must be considerably more in planning agriculture on the new basis. In no other way can the procedure be at once efficient and democratic.

METHODS OF EROSION CONTROL

This year’s exceptional weather drew attention forcibly to the need for a regional and local, as well as a national, approach to the problem of the soil. Floods in the Northeast and elsewhere and dust storms in the Great Plains demonstrated that in some areas all the land should be brought under uniform programs for the control of erosion. Operations launched under the Soil Conservation and Domestic Allotment Act moved in the desired direction, but the national approach cannot do everything that is necessary.

There is need also for intensive local operations in which each farm may be treated as part of a regional pattern. As is well known, good soil care on one farm may be counteracted by neglectful methods on neighboring farms. Efficient soil conservation cannot be promoted merely by the action of individual farmers; it requires coordinated effort through entire land-use regions.

Research, demonstration, and operations in this field are the special tasks of the Soil Conservation Service, which was established in 1933 in the Department of the Interior and transferred 2 years later to the Department of Agriculture. This Bureau cooperates in research with other Federal agencies as well as with the State agricultural experiment stations. It cooperates also with the Extension Service in the development of demonstration projects and in educational matters relating to erosion control. Essentially the methods of the Soil Conservation Service are intensive. It makes detailed surveys and studies the erosion conditions of entire land-use regions as a basis for specific recommendations and preventive practices.

The studies include topographical and contour mapping, erosion surveys, soil analyses, observations of land-use practices, and the testing of different expedients and practices. The demonstration projects accomplish three distinct purposes: They test various methods of erosion control, provide demonstrations of the appropriate methods, and actually prevent erosion on the particular lands involved. All available methods, such as correct cropping and rotations, tillage and engineering practices, moisture conservation, and pasture and forest development are applied in combination.

Mistaken land-use practices in the United States have caused the ruin by erosion of some 50,000,000 acres and seriously damaged 50,000,000 acres more. Much additional land is in danger. Soil erosion injures not merely the owners or the occupants of the eroded lands and their immediate neighbors; its harmful consequences extend through whole watersheds and throughout the country. Erosion dissipates fertile soil in dust storms, piles up soil on lower slopes, covers rich bottom land with poor subsoil, destroys food and cover for wildlife, and increases flood hazards. Furthermore, it causes the silting and sedimentation of stream channels, reservoirs, dams, ditches, and harbors, and damages roads, railways, irrigation works, power plants, and public water supplies. It is a public as well as a private liability, and it can be dealt with effectively only by cooperative endeavor.

SOIL LOSSES HEAVY IN 1936

Soil losses from the floods last spring were tremendous in the Northeast and in Texas and Colorado. Soil blowing in the Great Plains, with reduction of the vegetative cover, emphasized the need for a radical change in the farm system in certain areas, as well as for comprehensive soil-conserving programs. These conditions brought home to farmers generally, and to other interested groups, the fact that the soil problem has distinct regional and local peculiarities, the treatment of which requires methods appropriate to each region and each locality. Visible damage left by the floods and dust storms was only a fraction of the total damage, but it emphasized the helplessness of individual farmers in dealing with conditions that affect entire land-use regions.

Even in New England, much of which is forest-clad or in pasture, there is preventable erosion. Perhaps the most serious and widespread damage in 1936 occurred in the cotton States from North Carolina to Oklahoma and Texas. Overcropping caused erosion in the Corn Belt and overgrazing and overplowing were main soil hazards in the Great Plains. In certain regions the cultivation of steep slopes and the practice of setting brush fires did great harm. In some localities the most urgent-need is for engineering work such as terraces, check dams, ditches, and ponds, and in all localities there is need for adjustment in tillage practices. In some areas the problem is principally one of clothing denuded slopes with vegetation or of increasing the ratio of soil-conserving to soil-depleting crops. Everywhere, however, the problem has local peculiarities which interdict the use of blanket methods.

In the demonstration projects, 139 of which have been established in 41 States, the Soil Conservation Service begins by marking off a naturally bounded tract about 25,000 acres in extent. (There are three very large public-land projects in the Southwest and one in Wyoming, but these are not typical.) Next follow various soil and farm-management studies, including analyses of cropping systems and farm-income conditions. The results become the basis for a soil-conservation plan applicable to the demonstration area, to which the Soil Conservation Service gives effect by two principal means.

   (1) It reaches an understanding with the proper public agencies that may be involved; then (2) it enters into 5-year agreements with private landowners. Each agreement contains a plan for land use and appropriate practices, specifies the assistance to be given by the Service and the proportion of the work to be done, by the farmer, and obligates the operator or owner to maintain for the 5-year period any improvements that may be constructed and also to follow the agreed program of cropping and tillage. The Soil Conservation Service also draws up land-use programs for the entire area, including land not in farms as well as the land in actual cultivation.

Yet work of this type touches directly only the fringe of the problem. It covers only a fraction of the Nation’s farm land, and direct, involves a comparatively small number of farmers. Compared with what needs to be done, the amount of erosion control effected is very small. Research results and practical recommendations reach a wide audience through the extension services and find application on millions of farms in the national soil-conservation programs. Nevertheless much remains to be done. There is need for cooperation not only between the Federal and State agencies but between these agencies and local farm groups.

SOIL CONSERVATION ASSOCIATIONS

Accordingly, besides conducting demonstration projects and carrying on similar work with Emergency Conservation Work camps, the Soil Conservation Service is encouraging soil-conservation associations, more than 400 of which have been organized already. Most of them are on or near areas where there are demonstration projects or where Emergency Conservation Work projects are under way.  Membership in an association ranges from 10 to 400 farmers. It is entirely voluntary, and most of the associations have adopted articles of association without formal organization. They have the legal status of partnerships for limited purposes. Their members agree to live up to certain cropping and tillage practices and to cooperate in operations requiring concerted effort, such as the construction of terraces, check dams, ponds, and ditches.

There is a fundamental relationship between soil erosion and land-use practices on both farm and nonfarm land. It does not suffice to check erosion on farms here and there if other farms nearby continue to erode. Improper slope cultivation, with consequent heavy erosion, may ruin a whole valley lower down. In other words, the problem of preventing soil erosion is a social as well as an individual problem, and the soil-conservation associations rest on this principle.  The organized farmers of an entire land-use area make a united attack on a problem which they could not solve individually.

In tackling the problem of the soil, however, voluntary organizations of the kind above described have obvious limitations. At the request of State agencies this Department has prepared a standard State conservation-districts law to serve as a recommendation regarding the nature of appropriate legislation, which, if enacted by State legislatures, would authorize the formation of public agencies with power to enter into agreement with farmers relating to the performance of appropriate control operations on eroding lands, and in case of majority vote, to establish land-use regulations. Texas has passed such legislation, providing authority to wind-erosion districts to expend funds and carry on work on lands not properly treated by the owners. In that State 14 conservation districts have been organized.  Several other States are considering the enactment of similar laws at the next sessions of their legislatures.

The standard measure provides that proposed land-use regulations must be submitted to a referendum of the land occupiers and may not be enacted without a favorable majority vote. Once approved, the regulations would be binding on all lands within the district. There are provisions for notice, hearing, referenda, administrative appeal, and judicial review. No district could be organized without a majority in favor of it, and no specific regulation could be imposed without a referendum.

Boundaries of the conservation districts would be determined by a State soil-conservation committee, which could not act, however, until a petition had been filed with it by at least 25 farmers and until a public hearing had been held. The committee would fix the district boundaries by a State plan, drawn up to indicate the soil, the topography, and the types of farming. Once organized, the district would have the authority to accept funds and services and otherwise to cooperate with Governmental agencies in the development of plans and programs for the district.

It would receive an annual appropriation from the State legislature, and technical and other assistance from both State and Federal agencies. It would have the power to make intensive studies of its territory and to contract with farmers for the performance of necessary control work. Wide adoption of this plan would provide the opportunity to develop erosion-control operations on an intensive local basis as a useful and, indeed, necessary complement to the more general agricultural conservation program instituted under the Soil Conservation and Domestic Allotment Act.

LAND USE AND FLOOD CONTROL

In the Flood Control Act, which was approved June 22, 1936, Congress recognized the importance of land-use methods in flood control. Floods, of course, are erosion phenomena. They waste soil as well as water. The new law provides that Federal investigation of watersheds, measures for run-off and water-flow regulation, and measures for the prevention of soil erosion on watersheds shall be instituted by the Department of Agriculture. Studies and projects relating to the improvement of rivers and other waterways for flood control are the responsibility of the War Department. The act declares it to be the sense of Congress that flood control on navigable waters or their tributaries is a proper activity of the Federal Government in cooperation with the States and their political subdivisions, and that investigations looking to the protection of watersheds are in the general welfare. Thus the act emphasizes the complexity of the flood problem and points to the necessity for an approach to it from an agricultural as well as from an engineering standpoint.

LAND POLICY

It is coming to be generally recognized that the cornerstone of a sound national economy is a rational land policy. The droughts of recent years, with the resulting soil blowing and dust storms, have focused attention on the need of long-time land-use planning. Needless to say, wind erosion is not the only indication of the need. Forest devastation, the progress of soil erosion by water, the wide extent of submarginal farming on land unsuited to farming, the growing seriousness of tenure problems in many areas, and the prevalence of destructive cropping and overgrazing are a few of the problems which betoken the want of a coordinated land policy. Fortunately we have made a good start in recent years toward the development of a socially desirable land-utilization program.

The Resettlement Administration has begun to acquire poor farm lands and to promote their development for other uses. It has also aided farm people in some areas to find better locations. In the last fiscal year the Resettlement Administration obtained options on 9,500,000 acres of poor farm land in 207 projects. On the bulk of this acreage the Administration took up the options at an average price of about $4.50 an acre. Approximately $38,000,000 has been already allotted for the conservational development of these lands, and the undertaking gave employment to as many as 55,000 relief workers.

Among the 207 projects 46 were sponsored by the National Park Service of the Department of the Interior. These will be developed for recreational purposes. The Bureau of Biological Survey has sponsored 32 of the projects for the propagation and protection of migratory waterfowl. The Indian Service has sponsored 31 projects to provide more land for Indians. The Resettlement Administration has sponsored 96 projects primarily of an agricultural character, though some of them include recreation, wildlife, and forestry aspects. In its resettlement activities the Resettlement Administration has approved 97 projects calling for the purchase of 730,000 acres of land and the building of homes for 13,255 families. Funds are now available for the construction of 40 of these projects. In addition there are 43 subsistence-homestead communities either completed or in process of completion.

As noted elsewhere in this report, the Bureau of Biological Survey has acquired considerable land for the preservation and conservation of wildlife. Prior to 1933 it had purchased 215,365 acres with funds appropriated to it by Congress. These lands formed the nucleus for 11 wildlife refuges, within which, however, additional lands were needed. Since 1933 the Biological Survey has purchased considerably more land with emergency funds made available through the Resettlement Administration. On July 1 about 893,000 acres in 42 refuge units had been, or were being, acquired at a total land cost of $5,359,254. Another important aspect of the national land policy is being developed under the Taylor Grazing Act, which Congress i onied tact year in important respects. One amendment enlarged (from 80,000,000 to 142,000,000 acres) the area of vacant unappropriated and unreserved lands of the public domain available for the creation of grazing districts under the act, which is administered by the Department of the Interior.

   Land settlement, as well as the diversion of poor farm land to other uses, forms an integral part of the national land policy. Land Settlement or resettlement will doubtless continue as long as we have suitable land available. Between 1930 and 1935, according to the Census of Agriculture, the number of farms in the country increased by approximately half a million, This is an indication of the extent to which farming has cushioned the shock of the industrial depression. Industrial workers have established many of the new farms in and near industrial centers, but_a larger proportion of the increase has resulted from the fact that in the depression years the natural increase of the farm population could not find nonfarm employment. The new farms have developed largely on self-sufficing lines. Part-time farming underwent considerable development.  Numbers of industrial workers acquired small plots near their work.  They produced some of their own food and something to sell besides, and reduced their living expenses in other ways. Many suburban families started small-scale farming without moving. Some of them were able to rent land near their homes. This whole movement caused the census to classify as farms many places which previously had not so classified.

RETURN MIGRATION TO SUBMARGINAL LANDS

Another major type of recent land settlement is taking place on the poorer farm lands in several regions. In these areas, the chief of which are the southern Appalachian, the Lake States cut-over, and the Ozarks, considerable migration and farm abandonment had previously taken place. After 1930, however, many of the people who had gone away returned. They had lost their city jobs, and their former farm homes offered them at least a subsistence. But in some areas the part-time nonfarm work that had previously been available could no longer be obtained. Many lumbering and mining industries had collapsed, As a result the rural folk had to depend more than ever upon farming. The number of both part-time and full-time farmers increased. Furthermore, these areas have normally a high birth rate and there was no place for the rising generation to go. In consequence the rate of increase in the number of farms was greater in these areas than over the country as a whole. As a matter of fact, there was relatively little new settlement in the better commercial farming areas. In some such areas, indeed, as for example in central Indiana and Illinois, the farm population decreased, and farms became larger.

This tendency toward an increase in the number of farms in poor farm areas inevitably created difficult problems. It is not an easy matter to start _a new farm and get it well established even in good times. In hard times, particularly where the land is poor and where the settlers have little money, the obstacles are greater. Many farmers who returned to their former homes, or who took up other land, found themselves unable to make ends meet.

Small, poor farms inadequately stocked and equipped do not furnish an easy livelihood, and the occupants will be quick to move when better prospects appear. The Resettlement Administration is studying the problem and, where possible, is providing opportunities for the relocation of farm families on land better suited to their needs. The creation of new farms in regions of poor land, where soil depletion is serious and where the standard of public services is low, simply means the creation of rural slums. The new farms established in the last few years have commonly been smaller and poorer than the old ones, and sufficient additional part-time work can seldom be had. Resettlement alone cannot cure the trouble, though it may help. More is to be hoped for from the revival of industry, which will tend to lessen the pressure of population on the land; but unless employment opportunities in industry can be stabilized we shall continue to face the problems created by the periodic swings of a large segment of our rural population back and forth between country and city, moving cityward in good times and countryward in periods of depression.

The development of better land use is largely dependent on the improvement of land-tenure systems. Most people now recognize that not all the land should be in private hands. Public ownership is better for parks, for various recreational uses, for wildlife refuges, and frequently for forests. Certain types of grasslands, as well as forest lands, can be best managed as public property. These facts, which scarcely anyone now denies, do not warrant going to extremes in the public ownership of land resources. They simply indicate that the public ownership of land has a place in a good land system, and that tradition and custom should not be allowed to block reform.

There are good and bad methods of private ownership. Certain widely established practices stimulate unwise speculation, soil mining, absentee landlordism, and excessively high rates of tenancy. These are not the inseparable and unavoidable results of private ownership. Methods can be developed which tend to minimize them, as the experience of some other countries amply demonstrates. Our traditional land-tenure system has shortcomings which can be remedied without changing its fundamental character. But it is necessary to recognize that there are different types of land, some of which can best be used as private property and some of which can best be used in public ownership.

CONDITIONS PECULIAR TO UNITED STATES

It is necessary also to recognize that the tenure practices developed in this country are not the only practices available. Our methods of private ownership have developed tenancy conditions very different from those of some other countries. Thousands of our farm tenants change their farms every year, and thousands more have only the semblance of security in their tenure. Few tenant farmers, except those who occupy the farms of relatives, can be sure of operating their farms for longer than the period covered by the lease, which is generally for only one crop-year. Moreover, they have no stake in any improvements which they may make on the farms. If they keep the buildings and equipment in good repair and build-up the soil through good tillage or the application of fertilizer, or if they prevent erosion by terracing or other methods, they may have their rent raised. Should they be forced to leave they will not be compensated for the improvements. This fact discourages tenants from making farm improvements and from conserving the soil. The new Soil Conservation and Domestic Allotment Act is seriously handicapped in its application to tenant farmers by these difficulties.

Other countries have taken steps to reduce tenancy or to change and improve it, and eventually the United States must do the same.  It must face the problem of providing security for its great mass of landless farm people. The farm census of 1935 reported about 2,865,000 tenant farmers, whose families aggregated 12,500,000 people.  This was the largest number of tenant farmers ever reported by the census. In most States the percentage of tenancy increased significantly between 1930 and 1935. In certain areas more than two-thirds of the farm operators are tenants. Many of them frequently shift from farm to farm to the injury of the land, to the deterioration of community institutions, arid to the decline of their own morale. Also, our farm population includes several million farm laborers, a large proportion of whom lead a migratory life, with only casual and uncertain employment. This group, as well as the tenants, should be considered in our land policy.

This Department, in cooperation with the Resettlement Administration and other agencies, is studying ways and means of improving the tenancy system. The problem is national in scope and of tremendous importance. In some areas an acceptable remedy would be a more widespread diffusion of farm ownership provided such ownership can be protected from the worst vicissitudes of our economic life. One of the Resettlement Administration’s projects seeks to aid 1,000 southern tenants to become farm owners. Then there are way of improving leasing agreements. It should be possible to do so with advantage to landlords as well as tenants. The problem is to reshaping our land-tenure system so as to promote a type of agriculture calculated to conserve the soil, to give the cultivator a more secure occupancy of his farm, to maintain the existing capital investment in farm buildings and farm improvements, and to promote the development of sound rural institutions. Most of the necessary steps will require legislative action, both State and Federal. The whole problem requires statesmanlike treatment.

FARM-LAND VALUES

Farm-land values increased for the third successive year during the year ended March 1, 1936. This gain, of course, reflected continued improvement in agricultural conditions. Not only were valuations higher, but the farm-land market indicated increased interest on the part of prospective farm buyers, particularly in the East North Central and Pacific States. The number of farms purchased increased considerably. With the equities of farm owners rising, loan companies showed more willingness to finance sales; sellers raised their asking prices, and creditor agencies found themselves able to dispose of more farms. Tenants showed a definite interest in buying farms.

This Departments index of the value per acre of farm real estate rose during the period mentioned from 79 to 82 percent of the pre-war level. Gains were far more general than in either of the 2 preceding years. All States but two reported some increase. During the preceding year only 31 States reported rising values. As a group the Corn Belt States reported the greatest average increase, nearly 8 percent. States in the wheat region and grazing area of the West averaged 5-percent gains. The Cotton Belt States averaged 3 percent; the hay and dairy States averaged 2 percent. For 11 States the index was above the pre-war basis. Four of these States were in New England; one in the Middle Atlantic group of States; five in the South, and one on the Pacific coast.

There were favorable changes in the. frequency of transfer. For the country as a whole the number of farms transferred as a result of debt difficulties was a little smaller than during the preceding year, though the decline was not uniform. In fact, in a number of States such transfers increased. For the country as a whole, however, forced transfers associated with debt declined from an estimated frequency of 21.0 to 20.3 per thousand of all farms. The number of voluntary transfers showed a definite upturn and reached levels comparing favorably with those of the years immediately preceding the depression. This gain, though somewhat encouraging, did not indicate that a wholly normal farm real-estate market had become reastablished. Creditor agencies still had many farms which they were anxious to sell. Nevertheless, the emergency phases of land financing declined in importance.

From the standpoint of the individual farmer attention now shifts to making good on present loans and to securing normal financing at reasonsble cost. The Farm Credit Administration is giving substantial help. Its activities in refinancing, in the deferring of payments on principal, in the granting of extensions in facilitating the handling of distressed mortgage debts, and in reducing interest costs to farmers are important factors in the improvement of the farm real-estate situation, as well as in the improvement of agriculture as a whole. How effective this work has been can be seen in the decline in the number of farmers who need aid in preventing foreclosures and also in the decline in the number of extensions granted. Also, collections on loans held by the land banks are improving. The important task now is to develop a farm-mortgage system that will be more nearly shock proof than the system that existed before the depression.

FOREIGN TRADE IN FARM PRODUCTS

Farm products participated in the general increase which took place during the past fiscal year in all branches of United States foreign trade. This was true both of farm imports and farm exports, in spite of certain distorting influences that tended to enlarge the imports and diminish the exports. Chief of the abnormal forces was the persistent effect of the 1934 drought and a flight of capital into the United States from other countries. General business recovery, ee with the influence of the reciprocal trade agreement program, benefited the farm export trade materially.

Exports of United States farm products rose from 669 million dollars in the fiscal year 1935 to 767 millions in 1936. Imports of farm products (including coffee, rubber, silk, and many other exotic products) rose from 971 million dollars in 1934-35 to 1,185 million dollars in 1935-86. As compared with the low points of 590 million dollars in exports and 612 million dollars in imports during 1932-33, the increases seem large, but neither the exports nor the imports of farm products were near the levels maintained from 1920 to 1929.

Substantially larger shipments of cotton, tobacco, and fresh and dried fruits were mainly responsible for the improvement in the exports. Our exports of cotton, including linters, totaled 6,702,000 (500 pound) bales, as compared with 5,328,000 bales the preceding year.  Leaf-tobacco exports amounted to 417,539,000 pounds, against 353,347,000 pounds the year before. Improvement in the exports of fresh and dried fruits, practically all classes of which showed substantial gains, was in part a result of foreign duty reductions brought under the reciprocal trade agreement program. Exports of cured pork, and wheat, continued to reflect the reduction in caused by the drought of 1934 and by heavy rust damage to 1935. Lard exports fell to the lowest figure in recent years.  There were practically no exports of domestically produced wheat.

An important part of the increase in the agricultural imports was the so-called competitive products. It is necessary to distinguish between products like sugar and wool, of which we regularly import a great part of our supplies, and products such as corn, wheat, and rye which we import in significant amounts only under exceptional conditions. Most of the increase after 1932 in the value of our competitive agricultural imports was in the regularly imported items, which tend to be imported in greater quantities as economic conditions improve. But some of it in the last fiscal year was in grain and feeds, meats, dairy products, and eggs, the domestic production of which had been reduced by the 1934 drought. Imports of this character reached their peak during the first quarter of the fiscal year and then declined. The 1936 drought may again increase the imports of these products.

Another important distinction exists between noncompetitive imports and imports similar to commodities produced in the United States. Our total agricultural imports in 1935 amounted to 1,073 million dollars.1 Of this amount 483 million dollars, or 45 percent, consisted of noncompetitive items, like coffee, rubber, raw silk, bananas, spices, cocoa, and tea. There remained 590 million dollars’ worth of imports similar to or capable of being directly substituted for our own agricultural products. About 134 million dollars’ worth of sugar came in under strict quantitative limitations and cannot properly be deemed competitive. Subtracting the sugar leaves only 456 million dollars in competitive imports, or about 42 percent of the total of all agricultural products imported during the calendar year 1935. This total may be compared with our farm export total of 747 million dollars during the same period.

SIGNIFICANCE OF COMPETITIVE IMPORTS

Despite the domestic shortage of certain farm products, our imports of competitive commodities were less than two-thirds as high as the annual average for the decade preceding the depression. In most cases they represented an insignificant proportion of our normal output of similar products. They fell far short of offsetting the deficits left by the drought. Imports of corn in 1935 amounted to only 1.7 percent of our average annual corn production from 1928 to 1932. Wheat imports were 3.2 percent of the average production, oat imports only 0.8 percent, barley imports 4.7 percent, pork imports 0.1 percent, and beef imports of all kinds only 3 percent.

The drought of 1934 caused a reduction of 50 million tons from our average production of feed in the United States. In the year and a half from July 1934 to December 1935, imports of feed and fodders of all types amounted to less than 314 million tons, or only 7 percent of the shortage. Imports made up only a trifling part of the loss in production caused by the drought. The same was true of wheat, meat, and dairy products. Farmers met the feed shortage not primarily by imports, but by lighter feeding of animals, earlier and heavier pasturing, and heavy marketing for slaughter.

As a result of this year’s drought we may have to import some feed. This is the logical procedure, good for both producers and consumers. Agriculture’s problem is not how to stop a moderate flow of competitive imports following a crop failure but how to plan for its normal conditions, which are those of a surplus country. Normally, American agriculture encounters its major foreign competition abroad. It produces for export; and temporary shortages induced by drought should not hide the fact that an import-exclusion policy would react adversely on the export trade. Besides hurting the farmers, who must purchase feed in short-crop years, such a licy would permanently injure those who grow cotton, tobacco, wheat, hogs, and fruit.

In the balance of international payments of the United States for 1935 the increase in imports, which consisted of agricultural products brought in to relieve the drought emergency, tended to obscure the persistent unbalance between our import and export trade. As a result of these unusual temporary imports, our excess of exports was only $236,000,000. While that figure is at about the level of the balances during 1932 and 1933, it is lower than that for any other year since the World War. The apparent approach of our merchandise trade to an approximate balance, however, is illusory. It will probably be reversed as soon as we have normal crops unless the trade-agreements program greatly increases our imports of foreign industrial specialties. The largest single factor in the balance of payments for 1935 was the continuing flight of capital from Europe and elsewhere to the United States. This movement of capital tended, of course, temporarily to hide the necessity for increasing our imports.

RECIPROCAL TRADE AGREEMENTS

Agriculture is beginning to benefit from the Reciprocal Tariff Act.  During the last fiscal year the United States concluded reciprocal trade agreements with nine countries, namely, Colombia, Canada, Honduras, the Netherlands, Switzerland, Nicaragua, Guatemala, France, and Finland. It had entered previously into similar agreements with Cuba, Brazil, Belgium, Haiti, and Sweden. All 14 agreements are in effect except those with Finland and Nicaragua.  It is difficult to measure the results as yet.  Most of the agreements have not been long in effect and the period covered by their operation been one of abnormally low production in the United States.  Moreover, the countries with which agreements have been concluded ordinarily take only about a quarter of our total agricultural exports. It will not be possible fully to test the reciprocal trade-agreement Program until agreements have been concluded with one or more of countries that constitute our leading foreign markets, namely, the United Kingdom, Germany, and Japan.

Foreign countries have made important concessions on United States agricultural products. The agreement with Cuba substantially that country’s duties on American lard, potatoes, rice, and many other products. Canada reduced its duties on cured pork and lard and on a long list of fruits and vegetables. European concessions include lower import duties and larger import quotas on a long list of commodities and are particularly helpful to our fruits.  France has made important concessions as well on American tobacco, and several countries have relaxed their restrictions on imports of American lard and wheat. Cotton, our leading agricultural export, can benefit. only indirectly from the trade agreements, because the foreign countries with which tariff reductions can be obtained through such agreements do not impose serious restrictions on cotton. Most of the countries with which agreements have been concluded admit our cotton either duty-free or at low rates.

The reciprocal concessions which the United States has made help our exports by aiding foreign countries to get dollar exchange. We have made a few concessions on agricultural products. Few of them, however, were in effect during recent increase in agricultural imports. Negotiating the agreements the United States has kept two principles in mind: (1) That the import duties should not be reduced below the rates prevailing prior to the enactment of the disastrous Tariff Act of 1930; and (2) that on products of primary importance the reductions should be safeguarded either by seasonal limitations or by import quotas.

In the Cuban agreement, for example, the duties on vegetables are reduced for a limited period during which our own supplies are small. In the Canadian agreement the duty reductions on cattle, seed potatoes, and cream apply to strictly limited quantities. The only important agricultural items on which duty reductions have been made without some such safeguard are various types of cheese and imported wrapper tobacco. But the duties on cheese have not been reduced below the rate prevailing previous to the Tariff Act of 1930, and most of the types of cheese concerned are not produced commercially in this country. As for wrapper tobacco, few American farmers grow it, while many thousands produce the filler and binder tobacco which has to be combined with the imported article.

CONCESSIONS BY THE UNITED STATES

Most of the tariff concessions made by the United States are reductions on specialized industrial items or agreements to keep on the free list noncompetitive products such as coffee, cocoa, and bananas.  Other countries have made concessions to us on industrial products; and the advantage goes to American farmers as well as American manufacturers. Increased industrial exports mean more buying of farm products.

Broadly speaking, there are three types of reciprocal-trade agreements: (1) Bilateral arrangements for the exchange of exclusive concessions with individual countries, (2) arrangements based on conditional most-favored-nation treatment, and (3) arrangements based on unconditional most-favored-nation treatment. The United States has favored the third method, and it may be useful to glance at the reasons.

   (1) The strictly bilateral approach is open to the objection that it would reduce our foreign trade. In our trade with most countries we export more than we import. To equalize matters with these nations individually would require a reduction in our exports. This has been the experience of European countries that have tried to achieve bilateral balances of trade. Under our present policy triangular and multiangular trading squares matters. It enables countries that buy more than they sell here to even things up by transactions with other countries which in turn may divert products to the United States.

   (2) Under the second approach, the conditional most-favored-nation treatment, reciprocal concessions might be granted to countries that made equivalent concessions to us. But this method, too, tends to decrease the total trade. Few countries other than the parties to an agreement will be equally interested in the same commodities and duty reductions. Most countries will therefore be unwilling to make the equivalent concessions required. Moreover, they will object to discriminatory tariff treatment and may retaliate with higher duties against our goods.
The result may be a tariff war and new obstacles to international trade. Even without retaliatory measures discriminatory treatment under the conditional principle may force trade into more restricted channels. Changes in foreign trade affect the domestic markets.

   (3) The third or unconditional most-favored-nation approach has been followed by the United States in all cases except that of Cuba, under the present trade-agreement program. This is the policy required by the Reciprocal Trade Agreements Act, which directs the government to grant any tariff reductions to all countries except those that discriminate against the commerce of the United States.  Under this last restriction Germany and Australia have been denied the benefit of most-favored-nation treatment, but all other countries receive it. The unconditional most-favored-nation treatment, which has been followed by the United States since 1922, has the great advantage of affording a guarantee of no discrimination against us in our foreign markets.

In negotiating the Brazilian agreement the United States did not get a reduction in the Brazilian duty on wheat flour. Subsequently, over, the Brazilian Government reduced its flour tariff on its own initiative. The unconditional most-favored-nation clause in our trade agreement with Brazil gave the benefit of this reduction automatically to the United States, as well as to other countries. Conversely, Germany has been unwilling to come to an unconditional most-favored-nation understanding with the United States. As a result we have lost part of our market for agricultural products in that country.

WHAT SHOULD WE IMPORT?

In deciding the kind of imports that we should encourage under reciprocal-trade agreements it is important to remember that the United States tariff has had its greatest effect in the past in preventing imports of industrial products, and therefore in raising the prices of the things that farmers buy. The domestic market for most industrial products is relatively elastic, whereas the domestic market for most agricultural products is relatively inelastic. Many existing tariffs merely serve to bolster industrial monopolies, which use their advantage to obtain high prices. The major markets for United States farm exports are to be found in industrial producing countries such as Great Britain, Germany, and Japan. If the trade-agreements program is to go forward successfully we must conclude agreements with the large industrial countries and offer reductions in our duties on manufactured products.

THE 1936 CROPS

The year 1936 ranks next to 1934 as the most disastrous season for crops in the history of the country. Records going back to the early 1860’s include no seasons comparable with 1936 and 1934 in loss of acreage and reduction of yields. Both years brought great droughts. This year’s drought reduced crop production to about one-fourth less than the usual output; whereas the drought of 1934 reduced it to about one-third less.

Geographically, there was a striking resemblance between the two droughts. They were particularly severe in the whole area stretching from North Dakota and eastern Montana to north-central Texas, and extending eastward over Missouri, southwestern Illinois, southern and western Iowa, and west-central Minnesota. Northeastern Wyoming, parts of eastern Colorado, northeastern New Mexico, and northwestern Arkansas also suffered severely in both years. In both seasons the production of wheat, corn, oats, barley, rye, and grain sorghums was greatly reduced; but in 1936, except in limited areas, there was no repetition of the acute shortage of hay and roughage that caused so much trouble in 1934.

Corn production in 1936, as a result of the drought, was slightly smaller than that of 1934 and was the smallest corn crop harvested since 1881, when our population was only 40 percent of what it is today. Of the eight States which usually produce two-thirds of the total corn crop seven had even less rainfall during the summer months than they had in 1934. The corn crop was particularly poor in the Dakotas, Nebraska, Kansas, Missouri, and Oklahoma. In these States the acreage that could be harvested for grain was largely limited to the river bottoms, to areas favored by local showers, and to irrigated sections. Much of the crop was cut early for forage and silage or was pastured by livestock. Grasshopper damage was severe in some areas and in these localities crops had little value even for fodder. Present indications are that the total corn crop is only about 1,458,000,000 bushels as compared with an average of 2,553,000,000 bushels for the period 1928 to 1932.

About one-fourth of the acreage seeded to winter wheat was a loss as a result principally of drought conditions. Scarcely more than half of the seeded spring wheat acreage was harvested for grain. The total wheat production was only about 630,000,000 bushels. This is more than was produced in any of the preceding 3 years, all of which were very unfavorable, but less than the production of any other year since 1917. Rye suffered likewise. Abnormally high temperatures and drought combined reduced oat yields in practically all the important oats-producing States except those along the Pacific coast, and in some States onan nearly a total loss of the crop. Oats production is estimated at 777,000,000 bushels, or about two-thirds of the usual production. However, it was about 43 percent greater than the very short oat crop of 1934 and slightly above the crop of 1933, though below the production in any other year since 1896. The barley crop was reduced by one-half, It is estimated at 145,000,000 bushels, as compared with 282,000,000 bushels in 1935. Production of grain sorghums is estimated at 59,000,000 bushels, as compared with 97,800,000 bushels in 1935.

THE FEED-GRAIN SUPPLY

Production of corn, oats, barley, and grain sorghums combined is only about 58,000,000 tons, as compared with 93,000,000 in 1935, and 54,000,000 in 1934. In other years since the World War the combined production of these grains has averaged 100,000,000 tons and has ranged from 85,000,000 to 117,000,000. Reserves of grain on land will be closely utilized and net imports of grain and feedstuffs may have to be increased somewhat; but most of the shortage will be met by feeding hogs less grain than usual.

There is a fair supply of hay and roughage, Hay production is only about 10 percent below the average. In 1935, three-fourths of the States had hay crops above the average, and the supply of old hay on farms at the beginning of the season was rather large. But many farmers had to use some of their old hay this summer.  By utilizing straw, fodder, and other roughage a little more closely than usual and by using part of their reserves, farmers will be able to feed nearly the usual quantity of hay per unit of livestock.

   Rice, sugar beets, and irrigated crops generally gave good yields.  So did cotton and peanuts east of the Mississippi River. Tobacco, with yields about the average, was moderately light, drought having prevented expansion of the acreage. The buckwheat crop was the smallest since the Civil War. Drought damaged it severely in practically all producing States, Flaxseed production, though greater than in 1934, was below that of any other season in 60 years. Potato production was below average and sweetpotatoes about an average crop. As noted elsewhere in this report there was a fair supply of commercial vegetables and a light pack of most, canning vegetables except tomatoes.

WEATHER CONDITIONS OF 1936

Weather conditions in the United States in 1936 were extremely abnormal. During the spring months they produced unprecedented floods in the Eastern States, bad dust storms in the Middle West, and destructive tornadoes in the South. Later the most severe drought of record developed in the interior States. The drought was the third in recent years, others of tremendous national significance having occurred in 1930 and 1934. This year’s drought, besides causing enormous damage to crops, inflicted“ great hardship on farm people throughout an immense area, particularly in States that had not recovered from the drought of 1934. It aroused fears among some people that our climate might be undergoing a permanent change, though there is no scientific evidence that such is the case, and led to speculation as to whether recent conditions might possibly be due to some human activity. Various suggestions for preventing drought have been made. In general these suggestions fail to distinguish between basic changes in climate and proposals for mitigating or preventing some of its untoward effects. It will be interesting, after glancing at what the weather did to us in 1936, to notice what meteorological science has to say about the causes of floods and droughts— for both floods and drought have a common origin in the natural laws t govern evaporation and precipitation.

The floods in the Eastern States followed a severe winter, accompanied by the heaviest snowfall in many years in the country north of the Potomac, the Ohio, and the Missouri Rivers. Mild, rainy weather late in February and early in March caused rises and ice gorges in the rivers of New England and the Middle Atlantic States. About March 17 heavy rains fell on well-saturated and semifrozen soil, and the percentage of run-off was unusually high. Moreover, the northern rivers were at or above flood stage, and those in Maryland and Virginia, while not in flood, were higher than normal.

The result was disastrous floods in the James, the Potomac, the Susquehanna, the Connecticut, and the Merrimack Rivers, in some of the tributaries of the Ohio River in Pennsylvania, and in the Ohio from Pittsburgh, Pa., to below Wheeling, W. Va. The Ohio River flood gave a record crest stage of 46.0 feet at Pittsburgh on March 18.  The previous high-water record was 38.7 feet on March 15, 1907.  Flood damage in the Northeastern States was undoubtedly the greatest of record. Many houses were destroyed, and business was partially or completely paralyzed in many industrial areas. Losses to wage earners and retailers were heavy.

The weather of 1936 was dandy unfavorable for agriculture over the greater portion of the United States. Precipitation in the winter and early spring was very scanty in the Southwest, where the soil became extremely dry, and severe dust storms caused much damage. In May, however, there came abnormally heavy rains, which were especially helpful to winter wheat over large areas, particularly in Kansas. Other parts of the country were less fortunate. Serious conditions developed over large areas. Dry weather in May and June brought widespread damage to early truck, hay, and pastures.

SPRING EXCEPTIONALLY DRY

The spring was the driest of record in many southeastern localities. Great harm resulted to early crops in considerable areas, especially from North Carolina southward and southwestward to central Alabama. The winter-wheat crop, however, was not seriously affected, principally because of May rains in the western portion of the Wheat Belt. and comparatively cool weather in the eastern part. Some deterioration of the crop occurred, especially in northern districts. The spring-wheat crop and other small grains in the Northwest were severely damaged. The livestock situation became desperate. Over large areas there was neither feed nor sufficient water available.  However, conditions continued favorable in the North Pacific States.

The summer was abnormally hot and dry in all Central and Northern States between the Appalachian and Rocky Mountains. July had less than 10 percent of normal rainfall in considerable areas; there was less than half of normal (usually much less) in the western part of the Ohio Valley, the Great Lakes region, the upper Mississippi Valley, and throughout the Plains from Oklahoma northward to North Dakota and Montana. The States from Oklahoma northward to North Dakota had only from 20 to 36 percent of normal; Minnesota had about 20 percent; and Iowa less than 15 percent. July 1936 was drier than July 1934 in every State from Kentucky, Missouri, and Oklahoma northward to the Canadian border.

The months of June and July combined had an average of only about one-third of normal rainfall in the Plains States and about 40 percent of normal in the western Ohio and middle Mississippi Valleys.  In the interior States the 2-month period was much drier than the same 2 months during the great drought of 1934. Abnormally high temperatures aggravated the effect of the deficient moisture.

The 4 months of the growing season up to the end of July were the driest of record in the Dakotas, Minnesota, Wisconsin, Iowa, Missouri, Illinois, and Indiana, and the second driest in Ohio, Kentucky, Oklahoma, Kansas, and Montana. Of the Central and Northern States between the Appalachian and Rocky Mountains, only Michigan, Kansas, and Nebraska were drier in 1934 than this year for these 4 months.

The weather during August, for the most part, continued decidedly unfavorable throughout the central valleys, with afternoon temperatures in many places reaching 100° F. or higher nearly every day.  Lower temperatures and rather frequent showers were decidedly helpful in northern sections from New England westward to the Great Plains, including considerable portions of the eastern and northern Ohio Valley and some upper Mississippi Valley sections. However, during this month the drought extended southward to Texas, Arkansas, northern Louisiana, Mississippi, and Tennessee.

THE CAUSE OF DROUGHTS

There are two basic principles in rain production—evaporation which charges the air with moisture, and condensation, which releases it. The first is important, but the latter much more so in connection with droughts. The only way rain can be produced in appreciable amounts is by the air, including the invisible vapor of water, becoming cooled on a large scale. Cooling causes condensation because warm air can hold more moisture, more water vapor, per unit volume than cool air. The capacity of air, or rather of space, for holding invisible moisture doubles with each increase of 20° F. in temperature. Thus, a cubic foot of saturated air at 80° F., if cooled down to 60° F., must lose by condensation half of its water content, which appears as cloud and rain.

Air cools when rising because it comes under less and less pressure, and therefore expands; the normal fall in temperature for an ascending column of air is 1° for each 183 feet of rise. Nature effects this method of cooling in a number of ways, usually on an immense scale. Air moves from place to place over the earth’s surface in mass formation. These masses come from two main regions— polar and tropical. Those from the Poles are dense, heavy, and relatively cold; those from the Tropics are warmer and lighter.

When polar and tropical air masses meet, the tropical air, being lighter, naturally flows up over the opposing dense air, just as it would flow up a mountain side. As it ascends it expands and cools, and the water vapor is cooled enough to condense and fall as rain. Cooling the water vapor in this way is nature’s method of producing rain in appreciable amounts. It is the only effective way.

When the normal courses of these opposing air masses are disrupted for a considerable period, abnormal conditions, such as droughts, result. These processes have a world-wide relation. Nature’s weather factory is the whole world, and some of its operations have not yet been discovered. Just how and why these abnormal conditions establish themselves and persist so long, meterologists have not determined. Enough is known, however, to make ridiculous any suggestions that men can basically change the order of things.

NEW METHODS IN WEATHER FORECASTING

It has become practicable during recent years to supplement empirical methods of weather forecasting, as developed in. the nineteenth century on the basis of experience alone, with rational procedures based on an understanding of the physical processes involved; and as a result, weather forecasting has for some time been developing along sound physical lines, though for a long time it must continue to be a combination of physical reasoning with methods based on accumulated practical experience with synoptic charts.

Modern contributions to the difficult problem of weather forecasting are being actively studied and tested in the meteorological services of the United States and other countries, and the Weather Bureau is keeping informed on all important developments in this field. During the fiscal year 1936 substantial progress was made in developing air-mass analyses and applying them in forecasting.

In air-mass analysis attention is primarily directed to the great streams of air that are present over a given region and are composed of masses of air of different origin, properties, and motions, separated from one another by more or less pronounced discontinuities. The analysis of the synoptic map consists of the identification and delimitation of the different air masses, the determination of their motions and physical properties, and the relations of the weather phenomena to the physical processes operating.

To develop an adequate and effective working procedure in this analysis, to articulate it with the other work of the Weather Bureau, and to amalgamate it with the accumulated knowledge and experience gained in the past, requires prolonged study and trial. The work now being carried on is designed to develop, as quickly as possible, a satisfactory and workable technique. It has continually been made of greater and greater assistance to the official forecasters, who utilize it more and more in their work.

During January 1936 Sverre Petterssen, of the Norwegian Meteorological Service, conducted a series of lectures and conferences at the central office of the Weather Bureau on the physical analysis of weather maps (by the principles of air-mass analysis and also by certain principles based on the kinematic theory of fluid motion), and on weather forecasting. The analysis of maps and the making of forecasts are two quite distinct things; and Dr. Petterssen’s investigations have dealt particularly with the step from analysis to forecast. Great benefit to the work of the Weather Bureau has resulted.

In addition, a limited amount of research work on several problems involved in air-mass analysis and its practical applications has been done—particularly a preliminary study of the physical phenomena leading to the development of the severe cold waves which often enter the United States from Canada.

The past 7 years have been characterized by extreme heat and widespread droughts in summer, wind and dust storms of unprecedented violence, damaging floods, and during 1935-36, extremely low winter temperatures extending over wide areas of the country.  As a result of these abnormal weather conditions thousands of human lives have been lost, millions of dollars worth of property has been destroyed, and the income of many farmers has been wiped out or greatly reduced. The need for pursuing research studies looking toward the making of long-range weather and crop predictions is more apparent today than ever before. If there is one chance in a hundred of discovering the causes of abnormal weather, the effort is worth making, for agriculture, business, and the whole Nation would gain thereby.

PROJECTS UNDER BANKHEAD-JONES ACT

Under the Bankhead-Jones Research Act two lines of work have been undertaken. One, in which the Weather Bureau, the Bureau of Agricultural Economics, and meteorologists of Harvard University and the Massachusetts Institute of Technology are cooperating, is a survey and critical appraisal of methods now employed in attempts at long-range weather forecasting by foreign countries and by private individuals and agencies in this country. This survey should give a basis for research projects to be carried out during the fiscal year 1937 and thereafter. Certain statistical investigations also are being carried on concerning planetary and lunar relationships with terrestrial weather, and periodicities in weather and solar phenomena.  The other study is concerned with the relationship between weather and crop yields and involves the cooperation of several bureaus of the Department, such as the Weather Bureau, the Bureau of Plant Industry, and the Bureau of Agricultural Economics, and also the assistance of a number of State agricultural experiment stations.  From these preliminary studies the Department. expects to develop more intensive research in crop-yield variations and weather factors during 1937 and subsequent fiscal years.

Comprehensive soil, phenological, yield, and weather data have been collected from experiment-station records in nine North Central and two Middle Atlantic States and from records of the dry-land farming stations of the Bureau of Plant Industry. Statistical technique is being developed for determining the validity of combination or segregation of yield series of different rotations, soil treatments, variety tests, etc., in order to form series that may be used in measuring crop-yield responses to fluctuations in weather phenomena. Most weather-crop research to date has been on an extensive scale geographically; averages of crop yields and weather by States and regions have been studied. It is believed the present, More intensive approach will lead to greater knowledge of the basic laws involved. 7 Nona has been made in the evaluation of work previously done in this field.

Under the Bankhead-Jones Research Act a project has been set up in the Bureau of Agricultural Economics in cooperation with Harvard University to provide for the study of relationships between solar and terrestrial phenomena, especially relationships having a bearing upon long-range weather forecasting. Equipment is being designed, using the principles of telephotography, for making daily observations of the sun’s corona. Heretofore measurements of this important indication of changes in solar activity have been possible only at infrequent times of complete eclipse of the sun.

In addition the Weather Bureau, with an allotment of funds from the Works Progress Administration, has continued its investigations begun with funds assigned it by the Civilian Works Administration. This work consists in computing correlations between conditions in the United States and precedent conditions in foreign countries. So far correlations have been completed between temperatures by quarters in 12 districts of the United States and pressure conditions at 60 foreign stations distributed throughout the world, both in the Northern and Southern Hemispheres. The time intervals employed were 3, 6, and 9 months. The survey of rainfall conditions in the United States as compared with precedent pressure conditions at the 60 foreign stations is rapidly nearing completion. It is planned next to compute correlations between foreign temperatures and foreign rainfall with subsequent temperature and rainfall conditions in the United States.

MEASURES FOR DROUGHT RELIEF

With other Government agencies both Federal and State, this Department cooperated in measures for drought relief. It so modified the soil-conservation program as to make allowance for conditions beyond the control of the farmers; issued supplementary provisions to increase the production of feed and forage; encouraged the planting of emergency forage and hay crops; and in general enabled farmers in drought areas to take advantage of the income-insurance features of the program. The Government’s readiness to make purchases of livestock from drought areas protected markets against sharp declines. Loans for the purchase and storage of seed enabled farmers to prepare for the next crop. An agency established at Kansas City facilitated the movement of feed into drought-stricken areas and also the movement of livestock from drought areas to localities where surplus feed and pastures were available.

Under the surplus-removal clauses (sec. 32) of the amended Agricultural Adjustment Act, quantities of food and feed became available for relief in drought States. Between June and September the shipments included 1,171 carloads of foodstuffs for human consumption and 375 carloads of millfeed for livestock. Some shipments of this kind would have been made in any case; but the drought emergency necessitated a considerable increase in shipments to drought areas. The Resettlement Administration made loans and grants to farmers for the purchase of feed, seed, forage, and food; the Works Progress Administration provided employment to farmers in road construction, in well digging, and in building small dams and reservoirs. The Farm Credit Administration alleviated credit difficulties, and the Federal Surplus Commodities Corporation carried out a small-grain seed-conservation program.   Western and Middle West carriers reduced freight rates on feed and livestock.

Beef-cattle numbers were more nearly in balance with feed supplies and with market requirements than they had been during the drought of 1934. Indications were that prices would be favorable to producers in 1937. There was no need, as there had been in the previous emergency, for the Government to buy several million head of cattle.  It purchased only enough to prevent sharp price declines, and restricted the purchases to the classes and grades of cattle least suitable for resale as stockers and feeders and least desirable for breeding herds. It disturbed the commercial cattle trade as little as possible and encouraged a movement back to the country for feeding and breeding.

The A. A. A. began purchasing cattle in the drought area on August 8, when market receipts above normal requirements caused a decline of prices. It made limited open-market purchases at terminal markets serving the drought territory. Up to September 4, however, it had purchased only 2,964 head. By that time fall rains in parts of the drought territory had encouraged farmers to retain cattle and had increased the demand for feeder stock. Funds available under section 32 of the amended Agricultural Adjustment Act provided the means for purchases of surplus livestock, The payments to farmers and ranchers were purchase payments only; they did not include additional benefit payments, as the cattle and sheep purchases in 1934 had done. Meat resulting from the buying programs went to the Federal Surplus Commodities Corporation for relief distribution.

SEED-GRAIN SITUATION

   There was a shortage of small grains suitable for seeding in the drought territory. The seed-grain purchase program helped to prevent an acute deficiency and to obviate the planting of light and undesirable seed in 1937. It provided for an advance of not more than $10,000,000 to the Farmers’ National Grain Corporation, a farmers’ cooperative, for the purchase of between 7,000,000 and 9,000,000 bushels of spring wheat, durum wheat, oats, barley, and flax. Seed grain thus acquired will be sold to farmers at reasonable prices before seeding time in 1937. Supervised by the Federal Surplus Commodities Corporation, the seed-purchase program included efforts to conserve and store desirable seed stocks.

It became evident in September that little corn suitable for seed in the western and north-central part of the Corn Belt will be available for the year’s crop. Reports from large sections of the western Corn Belt indicated it would be necessary to get from 2,000,000 to 8,000,000 bushels from other localities outside the worst drought- stricken sections. As a means of guarding against a shortage of adaptable varieties, the Government offered two types of non-recourse loans on farm-stored seed corn. One type made available a loan of $1.75 a bushel on field-selected corn having proper germination and storage qualities. The other offered a loan of $0.55 a bushel on good quality and properly stored crib corn, suitable for sorting at a later date. Each loan note gave the Government a purchase option amounting to $3.50 per bushel on the field selected and $1.50 a bushel on crib-selected corn, shelled and graded in the sack.

It proved difficult for the railroads to grant blanket reductions in freight rates on shipments of feed and livestock. They feared to incur some liability for discrimination, against which they had been specially protected in 1934 by a provision in the Drought Relief Appropriation Act. However, they made piecemeal concessions.  In the most seriously affected areas carriers quoted emergency rates on hay amounting to two-thirds of the normal rates. On coarse roughages they quoted 50 percent of the usual hay rates. On coarse grains and feeds and on feed ingredients they accepted shipments at two-thirds of the normal rates. These concessions enabled farmers to obtain feed from distant points and helped to keep local feed prices at more reasonable levels. On shipments of livestock to surplus-feed and pasture areas the railroads made a rate of 85 percent of the normal rate, with the privilege of returning the cattle on a 15-percent basis.

COMPARISON WITH 1935 FEED SUPPLY

The production of feed grains as estimated on September 1, 1936, was approximately 42 percent below the average for the 5 years, 1928 to 1932. But the number of livestock on farms was slightly less than during the 1928-32 period. In consequence, the production of feed grains per grain-consuming animal unit was only about 38 percent below the 1928-82 level. In terms of feed-grain production per animal unit, the output was about the same as that of 1934. The 1936 drought came later than that of 1934 and covered a smaller portion of the range and pasture areas of the West. Early hay production was not so seriously affected. Hay production per hay-consuming animal was only about 14 percent below the 1928-82 average, as compared with 35 percent below in 1934. Because the 1934 drought became serious early in the season, Congress appropriated $525,000,000 for drought-relief activities. This year’s drought did not become serious over large areas until late in June. No special appropriation for meeting it had been provided. Federal and State agencies modified their programs, however, in such a way as to provide substantial assistance to farmers in the drought areas.

LONG-TERM POLICIES FOR DROUGHT AREAS

Looking toward the development of a long-term program calculated to render future droughts less disastrous in the Great Plains region, a committee appointed by Executive order visited the region, conferred with farmers and public officials in the areas most seriously affected, and drew up a series of recommendations. The committee utilized the experience of numerous Federal and State agencies, many of which had dealt for many years with the problems of the semiarid lands. These agencies placed a mass of material at the committee’s disposal, and the conclusions reached were in large part the result of studies and experiments begun long ago. In thus bringing to a focus the best available knowledge on the subject the committee accomplished a work of outstanding public importance and laid a foundation for an effective remedial policy. The committee’s findings, in which I heartily concur, may usefully be summarized in this report.

Analyzing the causes of the present disaster, the committee assigned primary importance to the attempt which has been made several decades to impose on the Great Plains a system of agriculture not adapted to the region. Methods suited on the whole to a humid region were introduced into a semiarid region.  This was largely the outcome of a mistaken public policy. The Federal homestead law, for example, kept land allotments low and required that a portion of each allotment should be plowed. This policy, the committee said, caused immeasurable harm. On the western Plains it was both a stimulus to overcultivation and a condemnation of the cultivators to poverty.

Efforts to cure the trouble by enlarging the allowable individual holding did not work. In western North Dakota and Montana tracts or three times the size of those actually granted would have been necessary to support farm families adequately. As the ranges enclosed, feed crops were grown by intensive cultivation and the ranges were overstocked. Overcropping, overgrazing, and improper farm methods generally made the soil loose and unstable, promoted soil blowing and washing, lowered the ground-water level, rendered the whole area extremely vulnerable to periodic droughts. The settlers themselves could not avoid these mistakes.  They lacked both the knowledge and the incentive to do so and were victims of a mistaken national policy.

Settlement of the western Plains began, the committee observes, at the end of what appears to have been a 40-year dry period. It proceeded during a wet period which now seems to be terminated.  Droughts in the region during the latter part of the nineteenth century and the early years of the twentieth century were brief and infrequent.  Farmers regarded them as exceptional and did not change their farming methods. Weather records indicate, however, that a long dry period preceded the settlement of the Great Plains that we may now be in the midst of another prolonged dry period. This may have its wet years but may keep the average rainfall for a period below the long-time average.

It is impossible to make a confident forecast. But whether the present drought condition be brief or prolonged, the problems of the Great Plains region will remain essentially the same. Continued farming and ranching by the existing methods will cause continued trouble under any climatic conditions that are likely to prevail. The problem is not the product of a single drought or even of a series bad years. It is the outgrowth of a mistaken policy pursued for decades.

THE CRITICAL AREA

The Great Plains comprise an area stretching from west central Texas to the border of Canada. On the west the Rocky Mountains are the border. On the east the region is irregularly delimited near the one-hundredth meridian, where formerly the short-grass country merged into the tall-grass or prairie country. In the critical area are the Texas Panhandle, the Oklahoma Panhandle, northeastern New Mexico, and all the northern portion of the Plains. Annual rainfall is low throughout the entire region. There are short, intense storms, wide fluctuations of temperature, and strong prevailing winds.  Frost and snow make wind erosion a less serious danger in the north than in the south; but soil blowing and soil depletion occur throughout the region, particularly in areas of excessive plowing.

Millions of acres of the natural cover, the buffalo grass and grama grass, have been destroyed in the Great Plains and the soil made loose by continued cultivation, decay of grass roots, and reduction of the humus supply. This destructive process has been accelerated since the World War. Eight States lying partly within the region had 103,200,000 acres of harvested crops in 1929, as compared with 87,800,000 in 1919 and 12,200,000 in 1879. How wrong this plow-up program was can be inferred from the records made under the Homestead Act. Only 60 percent of the entries were perfected prior to 1916. Since then only 45 percent of the entries have been perfected.

The results of attempts at the intensive cultivation of the Great Plains over a tremendous aggregate area have been bankruptcy, tax delinquency, absentee ownership, and excessive tenancy. In 1935 the percentage of tenant farmers in eight Great Plains States was 41.1, as compared with 15.5 in 1880. Many farms have been abandoned.  Many residents moved out of the Great Plains between 1930 and 1935.  The “suitcase farmer”, of whom there were too many, visited his land only a few weeks each year for planting and harvesting. In drought years he abandoned his crop. He never made permanent farm improvements. Community services declined. The problem is not simply one of short-term relief but of long-term readjustment and reorganization.

Primarily, it is necessary to check overcropping and overgrazing, so that both soil and water may be conserved, and this end cannot be attained exclusively by individual action. Yet the committee’s proposals do not strike at the independence of the individual farmer.  On the contrary, the action recommended should restore an independence that has largely been lost. New public policies, designed to correct the existing mistaken policies, will stabilize the economy of the region and increase its power to maintain independent farm families. The fundamental requirement is to bring farming and livestock-raising methods into conformity with the natural conditions.

In many measures the Federal Government should take the initiative, particularly in leadership and guidance. Federal participation may be necessary also in the construction or financing of public works. Past Federal policy aa the misuse of the Great Plains. Present Federal policy should encourage the correct use. In emphasizing this principle the committee states that there need not be any conflict of jurisdiction between Federal agencies on the one hand and State and local agencies on the other. It believes that joint cooperative effort will prove workable, and more effective than any other method. Needless to say, the action taken should be continuous over a long period, with Federal and State agencies undertaking the functions they are best able to perform.

COMBINATION OF MEASURES NECESSARY

Efforts to develop a Great Plains economy capable of withstanding recurrent drought will require various measures involving Federal, State, and local cooperation. The basic aim should be to arrest excessive soil erosion and to conserve water. Public grants and subsidies should be harmonized with a plan calculated ultimately to do away with the need for such aids.

Soil and water conservation will require engineering, good agronomy, changes in tillage practices, financing, and public education.  On cultivated land it will be necessary to promote contour plowing, listing, terracing, strip cropping, and other soil-conserving practices.  Dams may be of use in checking water erosion and in holding water for use in dry periods. Reservoirs and wells should be developed.  Small irrigation systems for groups of families will be found useful.  In some areas large irrigation projects may be needed. Certain sub-marginal lands should be permanently withdrawn from farming.

Measures of this kind, however, can merely improve the conditions and practices on individual farms. They cannot effect the basic changes necessary in the whole land-use pattern. Therefore the committee recommended that public acquisition of lands should be continued on the basis of selecting those areas less suited to cultivation and grazing. Extension of the grazing range could be brought about in certain areas by bringing some arable farm land under public ownership. Abandoned farms or tax-delinquent land could sometimes be acquired. Land in some areas, it proposed, should be leased or optioned, with a stipulation that the users shall carry on an approved program of restoration to grass or forest.

Public land buying and regulated grazing, however, will not be very efficacious if private owners may still use their holdings in a manner destructive to neighboring property as well as to their own.  Therefore the committee suggests that the possibility of restraining wrong land uses should be explored within legal and constitutional limits.

In some areas cooperative grazing districts are attempting to prevent the overgrazing of their lands; and this policy the committee warmly endorsed. Each thing done, it declared, should be part of a coordinated project covering the entire region. As an aid to the cooperative control of grazing, it suggested that public land buying in some areas would help to block out desirable ranges. Such a project could be set going without arbitrary action by any public agency, and it could be carried out democratically by using existing facilities for ascertaining local interests and wishes. The pooling of scientific knowledge in a well-conceived educational campaign would be indispensable.

Research should be undertaken to determine how many people the region can properly support. With that determined, the problems of migration and relocation would be simplified. While discouraging aimless migration, the committee believes that in some areas a regrouping of the population would be beneficial. It is impossible, as yet, to determine whether or not the region can adequately support its present population. A shift from cropping to grazing might reduce the population in some localities but at the same time increase the real wealth of the region as a whole. Ultimately, the change would provide additional income. The fundamental purpose is not to depopulate the region, but to make it permanently habitable. Any other aim would be a confession of failure. In the long run the Great Plains will support more people on a higher standard of living if its agriculture is regulated intelligently than it can possibly support if present tendencies run their course.

In some localities farm holdings should generally be larger than those now prevailing. Such necessary increase in the size of farms would require governmental assistance. State and county governments may expedite the consolidation of small units by making available to grazing and other cooperative agencies certain tax-delinquent lands, which will not again be cultivated by their nominal owners. The aim should be to develop holdings large enough to support farm families in independence and comfort.

It is proposed that, the possibilities of rural zoning be explained as a means of preventing the sporadic settlement and breaking up of lands better adapted to range use than to arable farming.

The committee recommends the use of public credit to enable competent tenants to purchase and operate their own farms. Tenancy, it says, promotes soil mining and does not suit the Great Plains.  Also, the committee recommends the study of crop insurance and of ways and means to promote the transfer of certain croplands to grass farming. It urges public guidance in resettlement, and investigations to determine what new Federal legislation, if any, will be necessary. Essentially the committee finds that, while present methods in the Great Plains do not promise success, methods suited to the region can be developed through Federal, State, and local cooperation.

CROP INSURANCE

In the farmer’s life luck and chance are important factors. Each crop planted is a speculative venture. Unfavorable weather conditions, floods, insects, or disease may cause a partial or a complete failure of his crop. Studies of total farm income for all farmers do not tell the whole truth. Increases in prices in years of low production enhance the income of farmers who have a good crop, but benefit very little those whose crop fails. The distress due to widespread crop failure and the resulting necessary expense for relief suggest the need of some form of crop insurance.

The programs of the Agricultural Adjustment Administration contained a measure of crop insurance. The benefit payments were the only income of many farmers after the drought of 1934 had destroyed their crops. Undoubtedly the soil-conservation payments of 1936 will likewise serve as crop insurance in drought areas.  Crop insurance resulted as a byproduct of the adjustment program in connection with the administration of the Bankhead Cotton Control Act. In 1934 many farmers in the western part of the Cotton Belt produced less cotton than their allotment of tax-exemption certificates covered.  Through the operations of a pool set up to make transfers, they were able to sell their surplus certificates to farmers elsewhere who had produced cotton in excess of their allotments. Sale of their certificates enabled farmers who had suffered a partial or complete crop failure to recoup part of their losses.

The principle of crop insurance merits a prominent place in any broad plan for a national farm policy. Insurance viewed from the standpoint of the individual appears primarily as a contract for the indemnification of losses. Viewed from the standpoint of the whole group, however, it appears rather as an averaging of losses. The insured individual pays the average loss instead of taking the chances suffering a larger loss. Insurance is a social device by which “the loss lighteth lightly upon the many rather than heavily on the few.”

Crop insurance is a means by which systematic contributions by farmers, made in proportion to the risk to their crops, create a reserve out of which agriculture can finance its own relief from crop disaster.  It does not prevent disaster, but it does provide that the full weight shall not fall on a few.

Crop insurance differs in some respects from other types of insurance.  It insures against the loss, not of an existing value, but of a prospective value. In fire insurance loss can readily be measured, the value of the property is known or can be estimated. But if a crop fails, what is the loss? Is it the difference between the actual production and a bumper crop; between the actual production and an average crop; or between the actual production and the investment crop?.

Many have questioned whether it is sound policy to insure prospective profits and have advocated insuring only the investment in the in the crop.  But the investment in the crop is difficult to determine. Much it represents the farmer’s labor and other items that must be evaluated. Little of it represents a cash outlay that can be measured, accurately. It seems better to insure only a certain proportion of the average yield. That is much simpler. If only a reasonable percentage of the average yield is insured, the plan does not include the insurance of prospective profits.

REQUIREMENTS OF CROP INSURANCE

Top insurance should have a large element of saving. That is, it should involve not merely a horizontal averaging of losses for each but also a vertical averaging of losses over a period of years.  Losses in certain years may be so widespread that accumulations from more successful years are necessary to help carry the burden. This is very important. Hence the rates for crop insurance should be based on the peerage losses over a long period or over a shorter period that was worse than the average for most short periods of years. The successful operation of a plan for a few average years does not prove that it could successfully meet widespread disaster for several years.  Substantial reserves should be built up in good years.

All-risk crop insurance is not available to the farmer today.   Insurance companies have made several attempts to insure the crop of wheat and other grains. In 1917 such an attempt in the spring-wheat area failed partly because of drought and partly because insurance was written after it became apparent that there would be a short crop.   In 1920 another attempt failed largely because it included price insurance, and prices fell off sharply. Still another attempt in 1931 and 1932 failed because of a sharp drop in prices. But hail insurance, a specialized type, has proved successful.

Insurance has quite frequently been written on fruit and vegetable crops, particularly against frost and freeze hazards. Such insurance has sometimes been taken out only to protect the creditor. There is little being written today, most of the companies having withdrawn from the field. The experience was not always successful. The hazards were so great that a single company could not afford to carry the risk and reinsurance on such business was difficult to arrange. The large uncertain hazard for a single company necessitated high rates.

If crop insurance is to be made generally available to the farmer, probably the Government must assist. The Government is better able than private enterprise to carry out the venture on a scale large enough to reduce the impact of heavy losses in certain areas. Insurance, where extensive public protection is at stake, is not new for the Federal Government. We have insurance of bank deposits, insurance of loans for financing the construction and repair of houses, and life insurance for veterans. Also, we have unemployment insurance and a system akin to insurance for providing old-age annuities. Crop insurance would provide the farmer with a measure of social security comparable in some ways to the unemployment insurance and old- age retirement from which he is excluded under the Social Security Act.

Crop insurance, to be successful, should have an actuarial basis. There is little crop-insurance experience to study and reliance must be placed on the loss experience of farmers in general, with proper allowances for an adverse selection of risks. This Department is studying the problem with data for individual farms gathered incident to the adjustment programs of the Agricultural Adjustment Administration. These data cover a 5- to 6-year period which included several drought years. They are supplemented by estimated average-yield data for a long period. The estimates of cost derived therefrom should be conservative. The study emphasizes a type of insurance in which the coverage would be a certain fraction of the yield on the insured farm. Such a plan would not put a premium on the farming of poor land or on poor farming practices.

Differences among areas and counties are being studied, because rates would have to vary. Rates based on average costs over a wide area would attract only those who were favored by these rates. They would bring into the insurance group only farmers with risks greater than the average. In that event the losses would exceed the premiums collected. As far as possible, premium rates and insurance coverage should be so adjusted that each type of farmer and each type of farm would bear its own cost. Over a period sufficiently long, each farm should bear its own cost.

Crop insurance must not benefit the shiftless at the expense of the thrifty, and the poor land at the expense of the good. In large measure the insurance coverage and the premium rate should be based on the experience of the individual farm. The insurance coverage for an individual farm should probably be a given percentage of the average yield for that farm. The premium rate should probably, in a measure, be based on the average crop losses of that farm. data acquired for individual farms in the agricultural-adjust-program might provide a starting point.

PRINCIPLE OF THE EVER-NORMAL GRANARY

Crop insurance would be an attempt to solve the problem of short crops.  But bumper crops have not been an unmitigated blessing to the farmer. Frequently a large crop sells for less than a medium or a small crop. Both problems arise from wide variations in production, the one being the counterpart of the other. Perhaps a single solution could be worked out for both problems. Some system that would tend to level off the amount that individual farmers could and would place on the market in various years would tend to solve both problems.

In line with this thought the Department, in its studies of the costs of crop insurance, has given some consideration to the possibilities of the option of paying for the insurance “in kind”,

out of the production of years of surplus. This should make the burden of insurance premiums lighter and easier to bear. In the sample studies that have been made the surplus production was calculated each farm, the surplus production per acre being considered as the excess of the actual yield over the average yield. Only a fraction of that surplus would be needed to pay for insuring the yields up to percent of the average yield for each insured farm. In fact, for the 6-year period 1930-35 only from one-third to two-thirds of the surplus production would be necessary to meet the net cost of such insurance.

The plan, involving payments in kind and payment of premiums only in years of surplus, would really become the ever-normal granary plan with crop-insurance requirements serving as an automatic regulator.  In years of surplus a part of the crop would be drawn off the market and put into storage—the amount so drawn off being regulated by the predetermined insurance rates based on actuarial calculations. In years of crop failures the stored commodities would be released, the amount being automatically determined by the amount of indemnities necessary as defined by the insurance contracts. Since the plan would operate automatically, with the commodities being released from storage only in case of crop failure, the commodities in storage would not be a potential supply on the market tending to depress the price.

During surplus years the removal of the excess commodities from the market would tend to support the price. The part of the crop not used for insurance premiums would still be more than the farmer's average production, and with a supported price the income from the crop should be reduced but little, if at all. The release of commodities from storage in years of crop failure would tend to hold down the price, but farmers without a crop do not benefit from high prices. Under this plan the farmers who lost their crop would be indemnified, while ike farmers who produced a crop would get at least average prices.

Furthermore, as a form of price stabilization this plan would require no funds to buy up the commodity. The participating farmers would provide the capital in the form of premium payment in kind.

ANY PLAN SHOULD BE OPTIONAL

While the above plan for crop insurance has many excellent features, it would present many problems. The Department is committed to no single plan. It is interested in all possible angles of the problem and in various possible plans. Certain plans may be suited to some areas, and other plans to other areas. Any plan adopted should be voluntary and optional with the farmer.

Crop insurance is needed most in the single-crop areas. In regions of diversified farming the loss of a single crop is less calamitous. But though diversification is a form of self-insurance, it does not adequately offset losses from extensive droughts, floods, and infestations. Another form of self-insurance is the accumulation of reserves of feed and supplies and the accumulation of savings in some form of investment. But this method, too, needs often to be supplemented.

Farmers have learned much in recent years about handling their local farm problems. Their experience under the A. A. A. should provide a base for the local administration of an insurance program. But if crop insurance is tried, it should be as an experiment and should be confined at first to one or two crops—wheat and possibly corn or cotton. It should be limited in the beginning to areas where there is a real need and a real demand. It should not be considered a complete protective program in itself, but should be part of a larger unified program involving soil conservation, retirement from farm uses of land unsuited to agriculture, judicious commodity loans, and the ever-normal granary.

COTTON

In some respects the cotton situation is better now than it has been for several years. This year’s crop of 12,400,000 bales (November estimate) is larger than that of 1984 to 1935, but the carry-over of American cotton is the smallest since 1930, and the world supply of American cotton is the smallest in 12 years. There is no shortage of American cotton. On the contrary the supply is more than ample, but in comparison with the situation in recent years the present supply-and-demand relationship is not so unfavorable to the producer.  In fact, returns to domestic growers promise to exceed those received for any crop since 1929.

Since August 1932 the world carry-over of American cotton has been reduced from 13,000,000 to 7,000,000 bales. Though still somewhat larger than an average carry-over, this quantity is 2,000,000 bales below the carry-over in August 1935 and is the smallest in 6 years. The total world supply of American cotton this season will be about 14 million bales less than in the previous season, despite the increase in the 1936 crop.

Income to farmers for cotton marketed during the present crop year will probably be the largest since 1929-30, though about 30 percent below the average for the period 1919 to 1929. Among the causes of the improvement are of course recovery of business at home and abroad, changes in the supply position, and the reciprocal trade agreements program which the Government has instituted. This program benefits cotton exporters by enabling foreign buyers to get dollar exchange. Part of the advance which has taken place in the price of cotton since 1933 may be attributed to dollar revaluation. Production control has been an important factor. The revaluation by itself would probably have encouraged farmers to increase their output and would have tended to counteract the influence the monetary policy. The improvement in the cotton situation is the outgrowth of numerous factors the separate influence of which cannot be accurately measured.

Certain unfavorable aspects of the situation should be noticed.  World consumption of cotton in the 1935-386 season was about 27,700,000 bales, the largest consumption on record.   American cotton accounted for 12,500,000 bales, as compared with 11,300,000 bales the previous season. Though American cotton represented a slightly larger proportion of the consumption in 1935-36 than it did in 1934-35, it was materially below the average for the decade ended 1933. Mill comsumption of foreign cotton, on the other hand, increased to a new high level and was above the 10-year average and above the consumption of American.

Numerous factors contributed to this shift in the relative consumption American and foreign cotton, some of them of long standing.  The production of cotton in other countries increased rapidly after the World War, side by side with an increase in our own production.  Meantime trade restrictions throughout the world, among which our own tariff policy exercised a large influence, tended to handicap our cotton-export trade. Foreign countries turned as much as possible to foreign cottons, particularly when they could offer industrial commodities in exchange. They wanted to buy where they could sell, and the American tariff policy made it difficult for them to do so in the United States.

OBSTACLES TO COTTON-EXPORT TRADE

When cotton prices and income fell to the low levels of 1932, it was evident that something had to be done to help American growers.  With the aid of the Federal Government domestic producers undertook to readjust their output. The ensuing price recovery inevitably benefited foreign as well as American cotton growers, and the trend toward relatively increased production of foreign growths, which had long been in evidence, continued, although perhaps not to the extent implied in the trade press.

Obstacles quite independent of our production policy stand in the way of increased foreign consumption of American cotton: (1) The difficulty foreign consumers still have in getting dollar exchange, and so long as we bar out foreign goods this difficulty cannot greatly diminish.   (2) Other countries are forging ahead in cotton production.   (3) The competition of other fibers is growing. These obstacles, however, can be surmounted. Recent trends in our tariff policy are steps in the right direction. Our advantages in cotton growing are substantial, and the world demand for cotton should continue to increase.  When he can do so without losing money, the American grower will respond. The Department is engaged in an extended cotton-breeding program which should play its part eventually in making American cotton grower the most efficient in the world.

WHEAT

Despite the effects of the drought the total supply of wheat in the United States for the 1936-37 season is large enough for the usual domestic requirements. Supplies of hard ae spring wheat and durum wheat are short, however, and imports of these types will continue. The drought reached its greatest intensity in the hard red spring and durum wheat areas. The winter-wheat crop was larger than that of 1935 and of good quality. Probably the spring- wheat mills will use a larger percentage of hard red winter wheat and Pacific Northwest wheat this year than they did last. More than the usual quantity of soft red winter wheat will probably be used in bread flour. It is expected therefore that the imports of milling wheat in 1936-87 will not exceed the 26,000,000 bushels imported in 1935-36.

The Pacific Northwest, the principal white-wheat region, again produced a surplus. In 1933-34 the disposal of its surplus was financed out of processing-tax funds. In 1935-36 exporters in the Pacific Northwest were indemnified for losses sustained on exports to the Philippine Islands, funds for which were made available from tariff revenues under section 32 of the amended Agricultural Adjustment Act. In this same year, as well as in 1936, considerable amounts of white wheat from the Pacific Northwest moved east of the Rockies, some of it going into relief channels. Ordinarily, however, wheat from the Pacific Northwest cannot compete east of the Rockies with Great Plains wheat, which normally constitutes the bulk of our supply of bread wheats. In years of average United States production the Pacific Northwest must seek a market abroad.

Since 1933 wheat prices in the United States have been high in relation to the world market price. They have ranged from 20 to 30 cents a bushel higher than they would probably have done had our production been normal. Average or above-average yields in this country next year would give an export surplus and cause an adjustment of the domestic price toward an export basis. On an acreage equal to that seeded for the 1936 crop, yields one-fourth below the average would provide enough wheat for the usual domestic utilization.

Our wheat farmers continue to expand their acreage. The area seeded for the 1936 crop was 74,500,000 acres, the largest on record with the exception of that seeded in 1919. In 1935 growers who had signed the A. A. A. wheat-adjustment contract had the right to plant 95 percent of their base acreage. But many had seeded winter wheat in the fall of 1935, before the contract was offered to them, and there was a tendency for farmers to plant larger acreages. In addition, nonsigners increased their seedings. Large acreage does not always mean large production. In years of normal growing weather, however, the existing wheat acreage in the United States will produce large export surpluses, for which satisfactory outlets do not now exist.

It is better to have a balanced acreage. With a balanced acreage less land shows a loss in drought years, and less wheat has to be sold below cost in years of normal crops. In 1986 the soil-conservation program provided payments to wheat growers for the diversion of land from soil-depleting to soil-conserving crops. However, the list of soil-depleting crops included many crops besides wheat, and participating growers did not have to make any adjustment in their wheat acreage if they were in a position to divert other land from soil-depleting to soil-conserving uses.

Cash farm income from wheat in 1936 may be between $425,000,000 and 5,000,000, exclusive of payments to wheat farmers under the agricultural conservation program. The corresponding figure for was $353,284,000, excluding the $115,368,000 in the A. A. A. adjustment payments. Cash farm income from wheat in 1932 was only $195,860,000. Needless to say, the income from wheat this year will be very unequally distributed as a result of the drought. Growers in the States worst affected will receive comparatively little, while growers in the States not affected will make large returns. This rough estimate of wheat income rests partly on the expectation that world wheat prices in 1936-37 will be materially higher than they were in 1935-86. Several important wheat countries, as well as the United States, have below-average production this year.

DISTRIBUTION WITHIN THE UNITED STATES

Market outlets will have more effect on the distribution of wheat within the United States in the future than they have exercised heretofore.  In the 1920’s there was a good demand for wheat in the markets of the world. All that was grown was sold at prices fairly remunerative. That is no longer the case. Formerly this country exported principally hard red winter, durum, and soft white wheats; there was a sufficient market at home for all or nearly all our hard red spring and soft red wheats. Hereafter the absence of an adequate foreign demand may create new problems of internal competition.

Our high-quality hard wheat is produced in the Great Plains under changing weather conditions and with widely fluctuating yields. regions are not adapted to producing it. Varieties of hard red spring and hard red winter wheat are grown to some extent in the Pacific Northwest and in the Corn Belt, but the product is less desirable for milling than the wheat grown in the western Great Plains.  Farmers in the soft red winter wheat region may shift from wheat to other crops, as the prices of the latter crops rise in relation to wheat prices.  In the Pacific Northwest, however, the farmers have fewer alternative crops to which they may turn, and this region will continue to be a specialized wheat region. This area will continue to have a considerable surplus of the soft wheats for export.

In the Great Plains the bread wheats will be the mainstay. Part of the area plowed during the 1920’s is better suited to ranching. Elsewhere, however, the Great Plains will continue to produce wheat, despite the prevailing climatic and other hazards, because the wheat grown there has exceptional value for milling and because wheat in large areas of the Great Plains had a market comparative advantage over other crops. Measures should be taken to stabilize the income from wheat in this region so that the Nation may have a reasonably dependable supply of Bread wheat.

LIVESTOCK AND FEEDS

Recovery in livestock production was under way last year following the 1934 drought, but this year’s drought checked it. On January 1, 1936, the number of grain-consuming animal units on farms was somewhat greater than it had been a year earlier, when it was the lowest since early in the present century. On the other hand, the number of hay-consuming animal units on farms was slightly lower than a year ago, though above the 10-year (1925-34) average. In January 1937 the number of both grain- and hay-consuming animal units on farms may be as low as, or even lower than it was, in January 1935. There was relatively heavy marketing of cattle and hogs in the fall of 1936, and close culling of dairy herds and poultry flocks. Moreover, the fall pig crop was smaller than that of 1935.

Total feed-grain production in 1936 was larger than that of 1934.  There was a larger supply of hay and roughage. In consequence the feed situation following the 1936 drought will be easier than was that following the 1934 drought. Farmers will be better able to winter their cattle, sheep, and work stock. But supplies of pork and the better grades of beef will be reduced next year. They may be almost as small as in 1935.

In 1936, for the third consecutive year, the demand for meats improved. Though lower than in the 5-year period prior to 1981, it was about equal in the first half of 1936 to what it was in the first half of 1931. Consumers spent for meat in this period about 12 percent more than in the corresponding period of 1935. They spent about 50 percent more than in the first half of 1933. The improvement, of course, reflected general economic recovery. There was a marked increase in both the total live and dressed weights of animals slaughtered under Federal inspection; the second half of the year will probably record a further increase. Total slaughter for the year will be much larger than it was in 1935, though less than the average for the 5-year oe 1930-34. In 1937, however, both the number and weight of the animals slaughtered will decrease. It is not probable that total yearly slaughter will again be equal to the average of 1930-84 before 1940, The feed situation will affect the trend of hog numbers more than the trend of any other species of livestock.

Indications on September 1 were that the 1936 corn crop would be slightly smaller than that in 1934 and the smallest in 55 years.  On the other hand, the production of oats, barley, and grain sorghums was large enough to give a combined production of feed grains of approximately 58,000,000 tons, as compared with 54,000,000 tons in 1934 and 93,000,000 tons in 1935. Corn prices will be relatively higher during most. of 1937, and hog production will be sharply curtailed. Though the number of hogs available for slaughter in the 1936-37 marketing year will be larger than in 1935-36, hog production for the calendar year 1937 will be smaller than in 1936. Hog prices for the marketing year beginning October 1 will probably average about the same as they did in 1935-36.

Despite the drought, the income to corn and hog producers was materially larger than that of 3 years ago. During the winter of 1932-83 the farm price of hogs fell below $3 per 100 pounds, the lowest level in more than 50 years. Income from the sale of hogs in 1932 amounted to only about $440,000,000, as compared with an income of about a billion dollars for a number of years prior to 1930.  In 1936 the income from the sale of hogs was about $840,000,000, and the farm price averaged $8.80 per 100 pounds. This sharp increase in prices and income from the depression level in 1932 occurred despite the absence of any material improvement in foreign demand for hog products. The foreign market for United States hog products retains only a fraction of its former proportions. Import restrictions in foreign countries and a marked revival in European hog production, which began effectively to curtail United States exports of hog products a number of years prior to 1932, continue to be the principal causes of greatly reduced exports. Exports of pork and lard fell from about 2,000,000,000 pounds in the early post-war years, to a little more than one-third as much in 1932, and since have remained at approximately that level.

UNEVEN DISTRIBUTIONS OF CORN-HOG INCOME

Although the income of farmers in the Corn Belt States was much greater in 1936 than in recent years, its distribution was very abnormal.  In the States hardest hit by drought, such as South Dakota, Nebraska and Missouri, the supply of corn, hogs, and other farm products for sale was very small, and even though prices were very favorable the income of farmers was small as compared with the with the income in the other Corn Belt States, where the effects of the drought were not nearly so great. The uneven effects of the drought were reflected in uneven distribution of farm income. In such States as Nebraska and South Dakota, where farmers had not recovered from the effects of the 1934 drought and where very little was obtained from the sale of cash crops in 1936, the payments received for participation in the 1936 agricultural-conservation program constituted a substantial proportion of their total income for the year. As was n 1934, payments for participation in the agricultural program received by farmers in the drought areas were in the nature of partial insurance against reduction in incomes resulting from drought.

CATTLE

The general cattle situation was less influenced by drought in 1936 than in 1934. In parts of the northern Great Plains, however, heavy liquidation of cattle was necessary. Beef cattle numbers at the beginning of 1937 will probably be smaller than they were at the beginning of 1936, though still above the average for the 10 years 1925-34. In January 1936 the total number of beef cattle, including calves on farms, was approximately 32,300,000 head, as compared with 36,100,000 head in 1934, when beef-cattle production was nearing a peak in the typical production cycle. Because of the reduced level of hog supplies, in competition for the consumers’ meat dollar, the cattle industry is now in a rather favorable position, and for the next few years the trend in cattle numbers will probably be upward.  In the first half of 1936 the average price paid by packers for all cattle slaughtered under Federal inspection was $6.60 per 100 pounds, or slightly lower than that in the first half of 1935.

SHEEP

Sheep and lamb producers fared comparatively well during the last months of 1935 and most of 1936. . Prices were above the levels of recent years, though slaughter was relatively high. Sheep and lamb production in 1936 was less affected by drought than in 1934. The feed position is better for sheep at present than for hogs and cattle, though in the Corn Belt many lamb-feeding areas have short feed supplies.

The 1936 lamb crop was about 9 percent larger than that of 1935 and only slightly smaller than the record lamb crop of 1931. Further expansion in the western sheep industry may be checked, however, by grazing-control measures instituted for the public domain in western areas under the Taylor Act.

The production of shorn wool in 1936 was slightly smaller than in 1935 and total supplies of wool on hand in this country at the end of June were smaller than a year earlier. Wool prices in 1936 rose to the highest levels since 1929. Relatively high wool consumption in Europe and a relatively low foreign wool supply strengthened both foreign and domestic prices.

In the United States, however, the consumption of wool during the first 7 months of 1936 was somewhat below that of the first half of 1935, though above the corresponding monthly average for the last 10 years.

DAIRYING

Increased business activity and fuller employment caused an improvement in the demand for dairy products, while the drought curtailed production. Prices for fluid milk rose and also prices for manufactured dairy products. Butter prices were 100 percent above the low point of the depression. Consumption of fluid milk and cream, which declined in the early years of the depression, turned upward in 1935 and continued upward in 1936. Markets that had been burdened with surpluses faced temporary shortages. The consumption of ice cream, and also of evaporated milk and cheese, increased. With prospects good for further improvement in business activity and employment, the dairy industry expected continued improvement in the demand for its products.

It seems probable that the drought, like that of 1934, will have proportionately less net effect on dairy production than on the output of other livestock products. In 1934-35 total milk production per capita was only about 5 percent below the peak of 1931. Dairy production in 1936-87 will probably be only from 5 to 7 percent less than it would have been had the weather of 1936 been normal. However, the effects of the drought will be felt in 1937-88 in a reduction in the number of cows on farms and in the number of heifers raised. It is expected that the number on farms will decline in 1937 to a relatively low level, owing to the heavy reduction caused by the drought in the supply of feed.

Between January 1, 1927, and January 1, 1934, the number of milk cows on farms increased 21 percent. This was much more than the proportionate increase in the human population. In fact, in 1934 the number of cows per capita was the highest in 35 years. From this point the drought of 1934 caused a decline, which continued in 1935.  By January 1, 1936, the number of milk cows per capita was about equal to the average for the 30-year period 1900-1929.

The trade agreement with Canada that went in effect on January 1, 1936, contains provisions affecting the dairy industry.   It provides for a reduction of the import duty on cream from 56.6 cents a gallon to 35 cents a gallon on not more than 1,500,000 gallons annually, also for a reduction in the duty on Cheddar cheese in original loaves from 7 cents a pound, with a minimum of 35 percent ad valorem to 5 cents a pound, with a minimum of 25 percent ad valorem. However, the reduced rate on cream is 5 cents a gallon higher than the rate established by Presidential proclamation effective June 13, 1929; it is the highest rate on cream the United States has ever had, with the exception of the rate established in the Tariff Act of 1930. The reduction in the rate on Cheddar cheese brings it down to the level that was in effect from September 1922 to June 1930.

In the first 6 months of the agreement the importation of cream amounted to only 6,233 gallons. The total imports of cheese amounted to 24,400,000 pounds—about the same as the relatively low imports of the first half of 1935. Canada contributed about a sixth of the total. In judging the effects of the reduced tariff rate on cheese it should be remembered that less than 6 percent of the milk produced in the United States goes into the production of cheese and also that our imports of Cheddar cheese are a small proportion of our total cheese production. The reductions in the tariff rates on cream and cheese will have little or no effect on the level of dairy prices.

TOBACCO

The 1936 tobacco crop, on the basis of September 1 indications, was the smallest since 1921 with the exception of the crops of 1932 and 1934. It amounted to 1,142,900,000 pounds, or 11.9 percent below the production of 1935 and 16.2 percent below the average for the 7-year period, 1923-29. Drought conditions were mainly responsible for the reduction. In many tobacco areas the acreage planted exceeded that of 1935. Only the cigar binder, the cigar wrapper, and the Georgia-Florida flue-cured types showed an increase in production. The production of all other types was much below that of last year, and the quality in many of the drought areas was impaired.

However, the stocks of domestic tobacco (farm-sales weight) held by dealers and manufacturers, though 1.5 percent below those of 1935-36, were still 24.6 percent above the 7-year average, 1923-24 to 1929-30. The available supply is estimated at more than 200 million pounds above normal requirements for domestic consumption and exports and for carry-over at the end of the year. The consumption of nearly all tobacco products increased in 1936. In the first 7 months of the year cigarette consumption reached an all-time record for that period. Indications are that the increase will continue.  Tobacco consumption per capita does not seem to be much affected by changes in price, but it increases with business recovery and employment. Our tobacco exports increased. Flue-cured tobacco, the predominant export type, represents about 70 percent of the total exports; and the exports of flue-cured tobacco in the last fiscal year were 32 percent above those of the preceding fiscal year, though 2.3 percent. below those of 1933-34. Exports of Maryland tobacco increased in 1936, while exports of other types declined.

Should the weighted average price for all types of tobacco not fall below the August prices for the Georgia and Florida flue-cured type and for the South Carolina flue-cured, the income to farmers from the sale of leaf would be about equal to what it was in 1935.

FRUITS AND VEGETABLES

Fruit and vegetable production, according to the September estimate, was about 11 percent less than in 1935, 9 percent less than in 1934, and about 6 percent below the average for the period 1928-32.  Truck crops decreased 13 percent, all fruits 9 percent, potatoes 20 percent, and sweetpotatoes 19 percent. On the other hand, truck crops for fresh market shipment were about 5 percent larger than in 1935. Reduced plantings and the drought were the chief causes of the drop in the production of truck crops for canning, of potatoes, and of sweetpotatoes. Fruit crops suffered comparatively little from the drought, but a severe late spring frost damaged apples, peaches, cherries, and grapes. Favorable growing conditions later failed to offset the damage, though citrus production was larger than in the previous year.

Acreage planted to all truck crops for canning was about 4 percent less than in 1935, but slightly larger than the harvested acreage in 1935 or in any previous year. Abandonment was substantial, owing to the drought. Drought and heat combined reduced the yields, which for all canning crops were about 10 percent below those of the previous year, and, in fact, were the lowest on record. Drought damage was severe to sweet corn, snap beans, and green peas. The total supply of canned vegetables will be about 10 percent below the figure for 1935, but 19 percent above 1934. Production of vegetables for fresh market shipment was higher than in 1935 owing to an increase in the acreage. Yields were generally about the same, though dry weather injured late cabbage. On the whole, the supply of fresh vegetables was ample. Income to the growers, moreover, was higher than for several years.

Potato production was estimated at only 312,000,000 bushels, as compared with 388,000,000 bushels in 1935. The acreage, however, was 10 percent less, and drought damage was severe except in the far West. For the country as a whole the indicated yield was only 97 bushels per acre, as compared with 109.2 bushels in 1935 and a 10-year (1923-82) average of 112.7 bushels. Sweet potato production, though small in comparison with that of 1935, was above the 5-year (1928-32) average.

In fruit production the 9-percent decline was largely in apples, peaches, cherries, and grapes. The apple crop was 35 percent less than in 1935 and was the smallest since 1921. Production of pears, apricots, fresh plums, prunes, strawberries, cranberries, and citrus was larger than in 1935. Citrus production may be one-sixth larger than last year, while production of all fruits combined, except apples and citrus, may be 12 percent smaller.

POULTRY

With poultry flocks not fully recovered from reductions caused by the 1934 drought, the drought of 1936 is causing reductions again.  However, hatchings increased greatly last spring.  There will probably be as many laying birds in farm flocks at the beginning of 1937 as there were a year before.

One important effect of the drought will be observed in the relation of egg prices to feed prices.  When feed prices rise more than egg prices, sales of laying birds tend to be greater, production per bird declines, and in the spring some reduction in hatching occurs.  The hatch of 1935 was reduced following the drought of 1934 because of an unfavorable relationship between feed prices and egg prices.  Hatchings in 1937 may decline similarly.

On the whole, prices of eggs and poultry in the first part of 1936 have been favorable to the producer.  Poultry prices, however, are now declining.  After the drought liquidation ceases they may resume the upward trend of the last 3 years.  Egg prices in early 1937, if they follow the course set after the drought of 1934, may continue the present rising tendency.

AGRICULTURAL CREDIT

   Farm-credit conditions have improved materially during the last year or so, largely as a result of improvement in farm incomes and a large amount of refinancing for long terms at low rates of interest.  In 1935 the demand for farm-mortgage loans declined sharply but remained more nearly steady in the first half of 1936.  Private lenders began to return to the farm-loan field; and borrowers had the further advantage of continued low interest rates.

   The character of the 1936 mortgage financing, moreover, was very different from that for the last 3 or 4 years.  Loan applications to an increasing degree were from farmers who were in no particular emergency.  An increasing number of the applications received by Farm Credit Administration agencies were made by young farmers and tenants.  The increased prices of farm commodities were encouraging them to try to become farm owners.  A large proportion of the other applications were made by farmers interested mainly in refinancing their debts for a long term of years in order to take advantage of the existing low interest rates.

   The passing of emergency financing among farmers with a reasonable amount of collateral for farm-mortgage credit is indicated by the decline in the number of applications for loans from Federal land banks and the Land Bank Commissioner, and by the reentry of private lending agencies into the farm-mortgage field.  Applications for land bank and Commissioner loans declined from 20,000 a week at the peak in 1933 to fewer than 3,000 a week in the summer of 1935 and to an average of 1,620 a week by May 1936.  Private lending agencies that were estimated to be doing only about 23 percent of the farm-mortgage business in the first quarter of 1934 and 49 percent in the first quarter of 1935 were doing approximately 70 percent of the business by the middle of 1936.

   During the first half of 1936 new loans of the Federal land banks were about offset by repayments and liquidation of loans as their loans outstanding remained about steady. Commissioner loans outstanding increased slightly. Loans made by other leading lending agencies did not quite offset repayments and liquidation as their loans outstanding continued to decrease, but at a reduced rate. Furthermore, there was some evidence in farm-mortgage recordings that farm-mortgage loans made by individuals were on the increase. Some debt distress persisted, however, in areas that had suffered partial crop failures for several years, and among farmers whose debt charges reflected previously excessive farm valuations. In spite of this, the general situation had improved to the extent that Commissioner loans, which in amount are about 63 percent second-mortgage loans, were decreasing at a more rapid rate than were the land-bank loans made during the first half of 1936.

   The principal backset to a more rapid improvement of the farm- credit situation came when drought developed again this year. As a result, there was an increased demand for loans for relief and rehabilitation by midyear.

FARM-MORTGAGE DEBT

It is unusually difficult just now to estimate the amount of the total farm-mortgage debt in the United States because so much refinancing has been done recently. Adequate statistics are not available to show the net changes produced by the delinquencies, the foreclosures, the compositions, the extensions, and the charge-offs of recent years. The last official estimate placed the amount at $8,000,000,000 as of January 1, 1934. There are no precise data on all the changes that have taken place since then, but indications are that through foreclosures and other means the total has been brought down somewhat from the 1934 figure. Needless to say, the amount of the farm debt does not by itself indicate the financial position of the farmers. Whether or not it is burdensome depends on the size of the debt relative to the farm income out of which principal and interest payments can be made.

Licensed member banks of the Federal Reserve System held farm-mortgage loans amounting to $253,000,000 in the first quarter of 1936, as compared with $263,000,000 in the first quarter of 1935. Farm- mortgage loans held by agencies of the Farm Credit Administration totaled $2,869,089,100 in January 1936, as compared with $2,586,206,691 in January 1935. These figures, however, do not indicate the whole trend, as financing through other agencies is quite important, though details are not available.

Farm borrowing for current production increased during the past year. Agricultural prices were at the highest level since 1930, and some expansion took place in farm acreage and livestock breeding. Many country banks increased their loans to farmers for current peace though frequently their total loans showed little change.

Lending by the production-credit associations of the Farm Credit Administration increased. In May 1936 the outstanding loans of these production-credit associations totaled $135,467,214, as compared with $101,269,485 in May 1935. It is characteristic of the early phases of agricultural revival for current production loans to increase more rapidly than mortgage financing.

Federal credit agencies during the year aided farmers through low interest rates.  Interest rates on outstanding Federal land-bank loans, which had been temporarily reduced in 1935 to 3½ percent, were continued by legislation on that basis for the period ending June 30, 1937.  On new mortgage loans the Federal land banks continued to charge 4 percent per annum. Other financing agencies offered low interest rates likewise, and the first half of 1936 saw some increase in farm-mortgage lending. Feed and seed loans made by the Federal Government, new lending by commercial banks, and loans from production-credit associations helped farmers in some areas to pay cash for more of their supplies and reduced the volume of costly store credit.  The Resettlement Administration enlarged its activities in handling distress cases; and by April 1936 its total loan commmitments had risen to $53,793,000.   After the drought the volume increased more rapidly.

The drought, of course, is complicating the farm-credit situation and delaying liquidation.  Short-term credit by the Farm Credit Administration agencies and by commercial banks amounted at the end of 1934 to about $1,121,000,000. Other personal loans, store credit, credit extended by implement firms, and loans negotiated by farmers’ cooperative associations made up an important additional amount.  Probably the total short-term credit outstanding did not change greatly between the end of 1934 and the middle of 1936, as country-bank loans outstanding continued to decline and outstanding short-term loans by Farm Credit Administration agencies continued a steady increase.

CHARACTER OF NEW SHORT-TERM CREDIT

As in the case of farm-mortgage credit, more important than any change in the amount of short-term credit outstanding was the change in the character of the new short-term credit being extended during the first half of 1936. More of it was for productive purposes and less of it for emergency financing of old debts. As an example, total short-term credit extended by Farm Credit Administration agencies, including the emergency and relief agencies during the first half of 1936 declined steadily and was less than for the same period the year before.  On the other hand, loans made by the production-credit associations alone increased during the first half of 1936 and were larger than for the same period a year earlier.

After the midyear, however, the drought increased the demand for short-term credit of a relief nature, which had fallen off in the spring months of 1936. Emergency crop loans and drought-relief loans outstanding have steadily increased since 1929 and 1930 and now constitute more than 40 percent of the total outstanding short-term credit administered by the Farm Credit Administration. In addition, loans or grants in the more distressed cases are being made by the Resettlement Administration.

AGRICULTURAL TAXES

Tax levies per acre on farm real estate have changed on an average very little in the last 3 years. They run about 54 percent above pre-war (1913) level and about 36 percent below the level of the peak year 1929. Factors governing the farm-taxation trend include, of course, the volume of the farm income, the expenses of local and State government, and the extent to which taxing bodies rely on the property tax for revenue. With respect to all these factors there are some favorable indications.

As indicated earlier in this report, the. outlook for the national farm income is favorable despite this year’s drought, though the regional distribution will be extremely abnormal. There is a possibility of continued economies in local and State expenses. Further drastic cuts, however, are unlikely as great curtailment has already been accomplished; moreover, local bodies may have to assume more responsibility for activities recently supported heavily by Federal aid.  As to the place of the property tax in State and local revenues, progress is being made toward developing additional sources, and toward shifting part of the burden from real estate to other forms of taxpaying ability.

Some of the reductions that have been made in farm-realty taxation are the result of curtailment in essential public: services. For example, school terms have been reduced and teachers’ salaries lowered.  School budgets, in fact, have been drastically cut in many areas.  Relief and rehabilitation expenditures have been extremely heavy, but the diversion of these expenditures to State sales and to Federal taxation has been a factor in lowering the farm-tax burden. As yet not much farm-tax relief has come from the reorganization of local and State governmental machinery, though this method offers important opportunities.

Improvement in farm income will have a dual effect, on the farm- tax situation. It will decrease the burdensomeness of any given tax payment, but it will also lessen the economic pressure toward further tax decrease and even toward continuation at the present level. As mentioned above, many of the decreases in real estate taxes during the past several years have been made possible by curtailment of basic governmental services. Such curtailments have in many communities been deplored and have been considered only temporary expedients. With further improvement in the economic situation and in farm income there undoubtedly will be a decided tendency to restore the curtailed services to their previous levels. The tendency probably will extend also to increases in any services which before the recent curtailment had been locally considered as inadequate.

Over a long period of years preceding 1929 there had been a practically continuous increase in average farm real-estate taxes per acre for the country as a whole. This is demonstrated by a preliminary index computed by the Bureau of Agricultural Economics for the period 1890 to 1918, coupled with the Bureaw’s current. series (1913-84). and a preliminary 1935 estimate. These series indicate an increase of about 267 percent in farm real-estate taxes per acre from 1890 to 1935. General price levels for the period increased about 40 percent, but even if adjustment is made for the price factor, there remains an increase of over 160 percent in farm real-estate taxes per acre. This figure of 160 percent should not be assumed to be altogether accurate, because changes in the general price level may not well represent changes in the composite price of governmental services, but it is believed to be a useful approximation for the present purpose.   On the assumption that local-government efficiency remained the same, these increases beyond the increase in prices should largely represent increase in governmental services.

The importance of this trend as it affects the future is its suggestion of a more or less constant demand for expansion of the services furnished by local and state governments. So long as such demand continues, there probably will be a decided tendency for farm taxes to increase in periods when farm income is relatively satisfactory and taxes are consequently less burdensome. The effect of this again will be influenced by any substituition of other tax sources for real-estate taxes.

There is heavy accumulated deliquency in farm taxation in many States.  The acreage delinquent seems to have reached a maximum in 1932.  Probably the amount of taxes delinquent continued to increase until 1934.  These arrears, which farmers are beginning to pay up, often exceed their current tax bills, and farmers’ tax payments in many cases will similarly exceed their bills for current taxes.

MARKETING AGREEMENTS

Marketing programs authorized in the original Agricultural Adjustment Act and modified under the subsequent amendments continue to help farmers to sell milk, fruits, and vegetables to better advantage.  As of July 1, 1936, there were in effect 39 marketing-agreement, order, or license programs. They included 21 licenses and 3 orders for fluid-milk markets, 1 marketing agreement and 1 license for the national evaporated-milk industry, 1 marketing agreement for the national dry skim-milk industry, and 11 marketing agreements supplemented by 4 licenses and 6 orders for 11 such crops as fruits, nuts, and vegetables. With processors, handlers, and cooperative associations acting together under these programs, destructive competition has diminished, and more stable marketing conditions have been established. Launched as emergency measures, the programs have come to be valued for permanent use.  Many of the more successful have been built on foundations already laid by the farmers’ cooperatives. Others have given the initial impulse to cooperative marketing in various localities. They have helped farmers to coordinate marketing with production and to apply up-to-date methods of sorting, grading, and distribution.

After the decision of the United States Supreme Court in the Hoosac Mills case, it became necessary to reorganize the administrative set-up for dealing with marketing programs. Marketing activities that had previously been handled by the commodity divisions of the A. A. A. were centered in the Division of Marketing and Marketing Agreements. Meantime, regional divisions were established for administering the Soil Conservation and Domestic Allotment Act.  The A. A. A. continued to develop and administer marketing programs, because the sections of the act relating to these activities were not before the court in the Hoosac Mills case. In subsequent suits, however, the marketing-agreement provisions of the Agricultural Adjustment Act have been questioned. The issue is whether the Hoosac Mills decision did or did not invalidate the marketing-agreement features along with the crop-control provisions of the act.

Final determination of the matter awaits action by the Supreme Court. In two out of three cases considered by Federal district courts, the marketing-program provisions of the Agricultural Adjustment Act have been upheld. In United States v. Hugh David Edwards, Judge Yankwich, of the United States District Court for the Southern District of California, found the marketing-agreement and order sections of the act to be separable from the crop-adjustment and processing-tax provisions. In United States v. David Buttrick et al., Judge Brewster, of the United States District Court of Massachusetts, took a contrary view. He held that the marketing- agreement and order provisions were inseparable from the crop- control and processing-tax provisions. Later, in United States v. Jerry Buckley et al., Judge St. Sure, in the United States District Court for the Northern District of California, continued in effect a restraining order that had been issued to halt violations of an order issued by the Secretary regulating the handling of deciduous-tree fruits.

As required by the amendments to the Agricultural Adjustment Act which were approved August 27, 1935, the Administration is replacing licenses with orders and carrying out the other requirements of the amended act. It has been possible to establish for various milk areas conditions tending to give all the producers an equitable share in the market. The agreements and orders usually provide for the classification of milk according to its use by the handlers; for the payment of minimum prices by handlers, and for the payment of uniform returns to producers under pool plans. Programs for the marketing of fruits and vegetables are simpler. They deal principally with the rate at which produce is shipped to market and tend to adjust market supplies move nearly to the prevailing demand. They affect, of course, only commodities already produced and ready for market. Additional programs are being developed at the request of producers and handlers, with the latter group showing an increased recognition of the fact that they have a common interest with farmers in the maintenance of fair prices to producers.

SURPLUS-REMOVAL OPERATIONS

Surplus-removal operations have been developed as a supplement to the marketing-agreement programs. The authority is section 32 of the amendments of August 1935 to the Agricultural Adjustment Act. This section makes available an amount equal to 30 percent of the annual customs receipts for the encouragement of exports and the diversion of surpluses to other uses. Congress has, subsequently amended it so as to include Government purchases of surplus farm products for relief distribution. The funds it makes available are in addition to congressional appropriations for the purchase of surplus dairy products for relief distribution. Operations under the section have dealt effectively with a number of farm-surplus situations, though the method is not universally applicable.

Advantages have resulted both to producers and to the needy. Surpluses that might otherwise have gone to waste have been moved into consumption, with a net gain both in farmers’ prices and in food consumption among low-income groups. The purchases for relief distribution have included apples, citrus fruits, prunes, pears, dried beans and peas, onions, turnips, cabbage, carrots, and eggs. In addition, the funds available under section 32 have made it possible to find new uses and new outlets for some farm products. ore than a dozen surplus-diversion programs are in operation, under agreements between the Secretary and organizations of producers and handlers.  They include programs for walnuts, pecans, raisins, prunes, dried figs, California fall and winter pears, dark air-cured and fire-cured tobacco, peanuts, and cotton.

The diversion programs authorize purchase of the commodities of grades or other requirements, at prices approved by the Secretary of Agriculture. The industry groups sell the products to anyone who will contract to convert them into byproduct or other authorized uses. Differences between the prices received and the prices paid for the products, plus incidental handling costs, are made up out at of section 32 funds. Other types of diversion programs do not involve agreements between the Secretary and any industrial group.  In these cases the diversion payment goes directly to individuals who comply with the requirements. For example, in a program designed to increase the exportation of pecans, the diversion payment to the exporters and represented the difference between the domestic buying price and the export selling price.

The benefits have much exceeded the costs. Purchases of prunes for relief distribution involved only a small outlay; but the operation prevented a disastrous break in prune prices, and in fact caused an advance in the market for the entire crop. Frequently the diversion into relief or other channels outside the usual course of trade brought about an increased distribution of the commodities through ordinary trade channels.  It had this effect because the resulting price gain removed any incentive to let the products go to waste.  Certain of the diversion programs include efforts to develop and expand uses for various products. In other cases, as for example, the export program for pecans, the programs introduced the commodity into markets previously unfamiliar with it.

MARKETING PROBLEMS

The farmer's interest in marketing is less direct than his interest in production, because as an individual he must take the marketing system about as he finds it. It requires group action, such as the organization of cooperative associations or the passage of legislation, to make significant changes in the marketing system. There are some things the individual farmer can do. He may choose between grading his crop, or selling it field run; between selling it at harvest time or storing it; and between selling it to a local buyer or to dealers in central or terminal markets.  Sometimes he can sell direct to the consumers.  Federal inspection services, and the Federal market-news service, give the farmer increased facility in marketing. But as an individual there is not much he can do to lower the costs of marketing or to make the distribution system operate more smoothly.

Farmers believe, however, that substantial improvements can be effected through legislation and through cooperative action. They are impressed with the size of the national bill for transportation, processing, and marketing. Even before the depression, in the decade of the 1920's, transportation, processing, and marketing absorbed about 55 cents of the consumer’s food dollar. At the bottom of the depression these services absorbed about 67 cents. Since 1933 the proportion left to the farmer has increased, but it is not yet back to what it was before 1929. This fact is not in itself a proof that marketing and distribution are inefficient or extortionate; but it is evident that we need to be concerned with the cost of these services fully as much as with the costs of production on the farm. The whole subject needs thorough study; and farmers’ organizations show an increasing awareness of the fact.

One way to reduce the costs of marketing and distribution is to suppress unfair and dishonest trade practices and to prevent racketeering. Enforcement of the Perishable Agricultural Commodities Act, the Packers and Stockyards Act, the Grain Futures Act, and the Food and Drug Administration Act has had a salutary influence.  Investigations by the Federal Trade Commission have raised the standards of commercial practice. Trade regulation by State and municipal authorities contributes to the same end; in fact, many phases of agricultural marketing are necessarily in State and local jurisdiction, since they do not affect interstate commerce directly.   But the problem usually transcends local or State lines. It is obvious, for example, that the California artichoke grower has a direct interest in preventing an artichoke racket in eastern markets. In many cases Federal, State, and local authorities must cooperate in preventing unfair trade practices, and perhaps in working out coordinated programs for improvement.

Research and service agencies, both Federal and State, must go beyond the provision of commodity inspection and market news, and the suppression of unfair trade practices. There is need for a positive program to improve the marketing system. Much could be done to promote efficient, low-cost handling of commodities, and to improve both the placing and the timing of the distribution. Many crops do not yet go to all the places where they could be profitably sold, and do not reach all their possible markets at the most advantageous moment. There is a field here for significant improvement.  But the problem is so intricate and involves so many aspects of intercommodity competition that cooperative study seems indispensable to effective Federal and State action.

RAPID PROGRESS UNLIKELY

It is unwise to expect extremely rapid progress. Our delicate and complicated marketing system has evolved gradually, in response to gradually changing conditions. Sudden and drastic overhauling might wreck it. But adjustments here and there are urgently needed.  Recent years have seen important developments to which parts of the marketing system have not become well-adapted. The growth of large-scale processing and distribution raises new marketing problems. Motortruck transportation, commodity exchanges, and direct buying also have an important bearing on the marketing process.  Study of these matters is a necessary preliminary to the development of a legislative policy that will be fair to producers, distributors, and consumers.

One part of the marketing machinery which obviously needs adjustment is the wholesale and jobbing markets for perishables. In many large cities the cost of marketing and distributing perishables seems unecessarily high. City marketing facilities have not been fully adapted to the motortruck, to direct purchasing by chain stores, and to other recent developments.   Competitive building of railway-terminal facilities has tended to split markets and has added to the costs of both buyer and seller. Trucking and rehandling could be greatly reduced in many large cities through better coordination of the available facilities. A related problem arises from the development of regional or concentration points in the, country. Several types of regional markets have grown rapidly since the beginning of the depression, and continuation of the growth will require research to keep it on sound lines.

An alarming development is a tendency toward the exclusion of outside foods from some markets and some States. Local protectionism of this type is profoundly repugnant to the spirit of our institutions and diminishes the Nation’s prosperity exactly in the same manner as the excessive development of international tariffs diminishes the volume of international trade. Among the causes of this country's prosperity in the past, free trade among the States ranks high; and no consideration of a purely local nature should be allowed to interfere with it.

In the handling of certain products, for example milk, health factors enter; and the right of the several States to impose and enforce sanitary regulations cannot be questioned. In other cases it may be necessary to limit free trade in order to prevent the spread of insect pests or diseases, or for other sound reasons of public policy. No one should object to such legislation when it really contributes to national welfare.  But there can be little doubt that in some cases the welfare of consumers and similar considerations have been used as an argument for regulations the main purpose of which is to benefit one group of producers at the expense of other groups.

Such legislation, if it is effective at all, prevents efficient production and efficient marketing. If carried to extremes it will raise food prices and lower consumption without benefiting producers. Temporary advantages gained by producers in one locality may be nullified by retaliatory legislation in other localities. It is extremely important to maintain among the States as high a degree of free trade as is consistent with the other legitimate objects of public policy.

INSECT CONDITIONS

Climatic factors played an important part during the year in the abundance and destructiveness of many major insect pests. The tent caterpillar and canker worms continued to occur in outbreak numbers in many sections of the Eastern States, and to defoliate trees over rather large areas.  In the same general region, however, the codling moth and the oriental fruit moth were less abundant than normally.  One of the introduced sawflies which feeds on grasses and grains was unusually abundant and destroyed wheat plants in certain parts of the upper Ohio Valley. Various kinds of cutworms were destructively abundant generally throughout the region east of the one hundredth meridian. The cotton boll weevil was less destructive than in average years. The cotton leafworm invaded the fields unusually early, stripping the plants over large areas in Texas and adjoining States in the Cotton Belt. The bollworm, or corn earworm, was more destructive to cotton than in any year since 1929, but was generally scarce in corn over the eastern half of the country.  It occurred in outbreak numbers in many sections in the west, and caused material losses of tomatoes. The house cricket was unusually abundant in many localities in the East. The abundance of these and many other insects is affected rather directly by the weather conditions. Some kinds, for example the periodical cicada, which occurred this last spring generally throughout the United States, are little affected by changes in weather conditions.

A few of the less familiar insect pests, such as the vetch weevil, the pepper weevil, tomato pinworm, cherry scale, and vegetable weevil, were found in new localities, A scale insect which had not previously been reported from the United States was discovered in a limited area in California and eradicated by the cooperative effort of State and Federal agencies.

During the summer of 1935 grasshoppers occurred in outbreak numbers in several of the Western and Middle Western States, but not to the same extent as they did in 1934. During the 1935 season the application of poison bait left over from the previous year materially contributed to reducing their numbers and protecting crops in several of the more severely infested States of the northern Plains region, particularly North Dakota. Drought conditions in the spring of 1936 were, however, very favorable for the development of grasshoppers, and outbreaks, accompanied by material damage, occurred in Nebraska, Iowa, Kansas, Missouri, Oklahoma, Minnesota, Montana, New Mexico, Arkansas, and eastern Colorado. This condition was anticipated and State officials for those sections, where cooperative surveys had been made the previous fall, were fully informed as to the possibility of grasshopper outbreaks, together with the estimate of the amount of material that would be needed to combat them, The area surveyed did not include Missouri, Oklahoma, and Arkansas, and accurate information was not available as to the sections of these States where the outbreaks were expected.

Limited amounts of bait materials left over from the previous control campaigns or secured through local and State agencies were available in a few sections only. These amounts, together with those secured with the special congressional appropriation of $250,000, made late in June 1936, were not adequate to meet the need, and farmers were urged to secure and distribute additional bait to protect their crops and reduce the numbers which menace next year’s crops. The grasshoppers developed into winged forms perhaps a month earlier than usual and in the absence of food and effective control moved generally throughout the area, including sections where they had not been abundant previously.

The great numbers of chinch bugs that entered hibernation in the all of 1934 presaged the most-severe outbreak of this pest in 50 years. Fortunately, the cold, wet spring which occurred over most of the area was so destructive to the bugs that outbreaks developed only in a few sections. It was, therefore, not necessary to use the special authorization and appropriation for chinch-bug control in the summer of 1935, and only $48,000 was expended of the $2,000,000 provided as an insurance fund to protect corn from bugs of the first generation.

The European corn borer caused severe damage in limited areas along the eastern seaboard, particularly to sweet corn. With the aid of an allotment from emergency funds, a survey was carried on to determine its spread, distribution, and relative abundance throughout the previously known infested area. To determine the status in the known infested area, 1,124 townships and 64 counties of 11 States were surveyed. During this survey 5,817 fields and 32,578 acres of corn were inspected. This survey disclosed that there was a general increase in borer abundance through much of the infested area. To determine the possible spread of the borer into new areas, scouts visited 712 townships in 28 counties in 11 States, examining 14,690 fields, totaling 192,222 acres. New infestations were found in 237 townships, but all of these were adjacent to areas previously known to be infested. This indicates that the spread had occurred largely by natural means.

The infestation of screwworm, first discovered in the Southeastern States in the fall of 1933, continued but was very materially reduced, largely because of the adoption of methods of treatment and handling livestock recommended during the cooperative educational campaign in 1935. The special appropriation of $480,000 which provided for the cooperative educational campaign made it possible to acquaint stockmen and others throughout the newly infested area with the approved methods of combating screwworms. During the summer of 1935 screwworms were unusually abundant throughout the Southwest, where infestation has annually caused material losses to cattle, sheep, and goats.

The educational and demonstrational work on screwworm control was extended to this section in the spring of 1936, and is now being conducted throughout the area infested by this pest. The extension and continuation of the work is provided for by an additional special appropriation of $460,000. The low temperatures which occurred during the winter over much of this area, together with the effective effort of combating the screwworm in areas where it overwintered, urged as a part of the educational campaign, greatly reduced the number of screwworm cases throughout the infested area. While the research to improve control measures should continue, the cooperative educational work can be brought to a close during the current year.

PLANT-PEST CONTROL

The date palm scale, an important introduced insect which at one time appeared to be the limiting factor to the development of date culture in the Southwestern States, has been eradicated from the United States. Continued intensive inspections failed to disclose the presence of this pest, and eradication activities begun a number of years ago were discontinued at the end of the fiscal year. At the same time the quarantine regulating the movement of date palms in the United States was withdrawn.

The restrictions governing the importation of plants likely to introduce this and other pests continue in effect. These and other regulations were studied, however, to determine whether conditions had altered sufficiently to justify modification of the requirements. Two special quarantines restricting the entry of pines were in fact rescinded, the evidence indicating that adequate protection was included under another quarantine.

Regular activities carried on in cooperation with State agencies for the control of plant pests were augmented by allotments from emergency funds to provide relief employment. Trained workers planned, organized, and directed the expansion of these activities so as to use relief labor effectively. At the peak of the active season 25,242 workers were employed in 1,497 counties in 44 States, and during the year the work provided 21,398,000 man-hours of employment. The regular activities expanded and benefited by this employment are: White-pine blister-rust control; gypsy-moth control; phony-peach eradication; citrus-canker eradication; barberry eradication; and the eradication of the Dutch elm disease. In some instances, including the gypsy-moth campaign east of the barrier zone, barberry eradication in Pennsylvania, West Virginia, and Virginia, and white-pine blister-rust eradication in the Appalachian Mountain States, the work was extended into sections not previously covered with regular funds.

The brown-tail moth, an introduced pest which has been present for many years in part of the New England States, though its spread into other sections has been prevented by the enforcement of a Federal quarantine, was combated in the infested area by relief workers employed under a special allotment. They destroyed millions of the webs in which the pest overwinters. The work of destroying wild cotton in southern Florida to eliminate the pink bollworm and protect the Cotton Belt against this pest, was expanded by relief employment. To lessen the risk of the spread of the dry-land form of the cotton boll weevil, of which wild cotton is a native host, relief labor employed under a special allotment located and destroyed 615,596 Thurberia plants in 163 square miles in the Tortollita Mountains of southeastern Arizona.

With the aid of emergency funds, the eradication of peach mosaic, a disease of major importance to peach culture recently discovered in certain western areas, was undertaken in cooperation with State agencies. This infectious disease materially affects the growth of the peach tree and causes the production of small knobby fruit of little commercial value. It was first discovered in Texas. A few infected trees were reported from western Colorado in 1934, and in the spring of 1935 thousands of infected trees were located in three western counties of this State. The only known way of combating the disease is to locate and destroy infected trees. Through the cooperative eradication effort thousands of infected trees were destroyed in western Colorado during the summer of 1935. Surveys so far conducted in 1936 disclose the presence of only a comparatively few infected trees in this area and demonstrate the effectiveness of the eradication work. Within the last few months the disease has also been located in parts of California, Utah, and New Mexico.  Plans to extend the eradication effort to these sections are being perfected.  Outlying infections may have been established through the movement of infected nursery stock.

Dutch elm disease, which threatens the destruction of elms thoughout the country, is an important problem in plant-pest control.  Only a small amount of regular funds was provided to combat this disease.  Allotments have been made from emergency funds and the cooperative eradication work pushed. The personnel-selection requirement, the necessity for training scouts and workers, and the uncertainty as to when and in what amount funds would be available, increased the difficulties. A few infected trees were found at outlying points, notably at Brunswick, Md., and Norfolk and Portsmouth, Va.; Old Lyme, Conn.; and Indianapolis, Ind. The infected trees were promptly destroyed. In the more heavily infected area—within a 50-mile radius of New York Harbor—the work included not only the location and removal of trees known to be infected, but also the location and removal of sick and dying trees, which may not only harbor the disease but may also serve as breeding places for the insect known to transmit the disease. All but a few of the 14,000 or so infected trees so far discovered in the United States were destroyed at the close of the fiscal year. Scouting during the past spring and early summer—the season most favorable for the location of infected trees—disclosed the presence of only a few infected trees as compared with the numbers discovered during the comparable period in 1935. This appears to demonstrate the practicability of eradicating the disease by methods used, the only ones known to be effective.

RESEARCH ON INSECTS

Research to determine effective ways of combating insect pests has continued along many lines. In the search for new insecticides, especially ones which will not leave harmful residues on the marketed food product, the chemists have synthesized more than 100 organic compounds which have been tested by the entomologists to determine their effect on insects. In the initial tests some 20 of these, mostly those in the azo group, were very toxic to insects and appeared to hold promise for use in combating at least certain kinds of insect pests.

Detailed studies of pyrethrum demonstrated that the chemical formula for the toxic principles from pyrethrum flowers is much simpler than had been believed. This discovery may make it possible to develop the active principles of these flowers synthetically.  At present our only source for this valuable insecticide is the imported flowers, approximating 10 million pounds annually. New compounds of nicotine have been made. Two promising ones are prepared from nicotine and peat, one soluble and the other insoluble in water. These are being tested on various insects including the codling moth, the principal pest of apples. An improved method of analyzing small amounts of nicotine opens up new ways of using this material, particularly as a fumigant. It has been demonstrated that the nicotine present in certain common types of tobacco is not present as a glucoside. This discovery has a practical bearing on the preparation of home-made tobacco preparations used for control of various insects.

Laboratory and field tests with organic insecticides, particularly derris and cubé, have brought many modifications in the recommendations for the control of certain insect pests. It has been demonstrated that these insecticides which do not leave residues objectionable from the standpoint of human health can be effectively used against a number of different truck-crop pests, such as certain cabbage worms and the Mexican bean beetle, and that they are effective against flea beetles destructive to growing tobacco. The further usefulness of these recently developed materials is evidenced by the determination that one application of sprays or dusts of derris or cubé is effective against the pea aphid over a longer period than other recommended materials such as pyrethrum and nicotine. The practicability of protecting sugar beets grown for seed purposes from destruction by curly top by the application of pyrethrum and oil as an atomized mist has also been demonstrated.

The low per-acre value of most cereal and forage crops prevents the use of direct measures to control certain important insect pests, and cultural and biological control methods are not always effective, particularly because community action is usually required. Various varieties and strains of these crops have shown marked insect resistance, and investigations along this line have been intensified. Certain strains of field corn have been demonstrated to have marked resistance to the European corn borer independent of the time of maturity of the corn. One of the important factors in cutting down infestation is a delayed tasseling common to certain inbreds. No resistant character has, however, so far been found in sweet-corn varieties and strains which is not directly associated with date of maturity. Strains of alfalfa entirely immune to alfalfa-aphid attack have been obtained by selection. Marked progress has been made in developing wheats suitable for California, Kansas, and Indiana conditions which are resistant to the hessian fly. A variety of wheat substantially immune to fly attack has been developed in California, and the incorporation of this characteristic in varieties suitable for commercial use is under way in cooperation with plant breeders.

Two varieties of soft red winter wheat highly resistant to fly attack have been discovered in Indiana. Certain varieties of hard red winter wheat have been discovered which may be utilized in producing suitable wheats for production in Kansas and surrounding States. Studies on chinch bug in sorghum and wheat have revealed that certain varieties of both of these crops show marked resistance to chinch-bug attack. The development and use of these may offer a means of avoiding the heavy annual losses, including those occurring during chinch-bug outbreaks, such as that of 1934, Certain varieties of field and sweet corn are definitely less susceptible than others to attack by the corn earworm. The practical possibilities of this discovery have not, however, been determined.

Investigations to determine the possibility of using predacious and parasitic insects as aids in combating injurious insect pests have been extended to new fields and include such pests as the pea moth, the lima-bean-pod borer, and the pea weevil. An allotment from the sugar-processing-tax funds from Hawaii provided for expeditions to Africa, South America, and the Orient in search of natural enemies to aid in combating the Mediterranean fruitfly and the melonfly in Hawaii. The introduction of natural enemies of insect pests into Puerto Rico, including an expedition to South America, was supported from a similar allotment from Puerto Rican tax funds. Eight beneficial insects have already been recovered on that island, three of which are well established and are being recolonized in parts of the mainland. Cooperative observations in Cuba fully substantiated the previous reports that the parasite of the citrus blackfly introduced that island in cooperation with the Cuban Government in 1930 is effective in controlling this pest and reducing the possibility of its reaching our shores.

Studies on the secretions from the larvae of those species of flies used in treating chronic ulcers and bone lesions disclosed that one of the secretions is urea, a well-known chemical, which is widely used and produced synthetically. Reports received from physicians and surgeons who cooperated in testing urea produced synthetically, and chemically identical with that in the fly secretion, suggest that it contributes to the healing of certain types of wounds and has a soothing and beneficial action on many kinds of skin infections as well as deep-seated wounds. This discovery, if supported by further investigations, may be of material benefit to the medical profession and may reduce human suffering.

CHEMISTRY AND SOILS RESEARCH

Chemists in the Bureau of Chemistry and Soils have long been engaged in developing useful products from agricultural raw materials such as straw, cobs, fruit, and vegetable culls, and other byproducts of agriculture. Farm byproducts constitute more than 60 percent of the material annually removed from the land. These materials are part of the farmer’s assets, as they are the fruits of his labor and of the fertility of the land. The straw, stalks, hulls, and other residues of the leading crops amount annually to more than 260,000,000 tons and contain approximately 115,000,000 tons of cellulose, 66,000,000 tons of pentosans, and 53,000,000 tons of lignin.  A large proportion of this material, now wasted, is available for industrial utilization.

Efforts by Department chemists to tap this reserve of potential wealh have yielded substantial results, among the more recent of which may be mentioned a process for making high-grade cellulose from sugarcane bagasse, methods for producing furfural cheaply from cobs or hulls, a continuous destructive-distillation process making charcoal and useful chemicals from various crop wastes, and fermentation processes for the production of fuel gas, organic acids, solvents, and residual cellulose fibers from crop wastes.

   For the utilization of surplus agricultural products and culls the chemists of the Department have developed processes for making commercial products from citrus fruits, a process for the extraction of starch for industrial uses from sweetpotatoes, and mold-fermentation processes for making organic acids from corn sugar. Improved methods of using cornstalks and cereal straws for making high-grade papers have received much attention, though the competition of other raw materials impedes commercial progress.

Chemical research in the Department during the last year contributed materially to the growing fund of knowledge of the utilization of agricultural products and byproducts. In cooperation with the Texas Agricultural Experiment Station, and using laboratories furnished by local chambers of commerce, the Department’s chemists further studied the utilization of surplus citrus fruits, culls, and by-products. They gave special attention to the production of fruit juices and concentrates, alcoholic beverages, vinegar, marmalade, candy, and volatile oil. Several commercial firms cooperated. That this work is valuable is attested by the fact that the number of commercial plants utilizing citrus culls in Texas increased from 3 in 1933 to 17 in 1935. In the same period the amount of money paid annually to growers in that State for citrus culls increased from $10,000 to $250,000.

In California investigators studied the production of wines and brandies from surplus and cull deciduous fruits, the loosening of stick-tight walnut hulls by ethylene, the preservation of fruit and fruit pulps by freezing, and the production of sirups and concentrates from apples, pears, and dates. In cooperation with the Washington State tame of Agriculture and Agricultural Experiment Station, the Department established a new laboratory at Pullman, Wash., known as the Fruit and Vegetable Byproducts Laboratory, where it will investigate the utilization of fruits and vegetables grown in that section.

EXPERIMENTATION AT BYPRODUCTS LABORATORY

Work proceeded at the agricultural byproducts laboratory at Ames, Iowa, on the production of cellulose, paper pulp, destructive-distillation products, and fermentation products from crop wastes. In these studies the Department cooperates with Iowa State College.  In cooperation with the New York Agricultural Experiment Station at Geneva, N. Y., the Department is investigating the utilization of grapes, berries, and other fruits in the manufacture of commercial fruit juices, wines, and beverages. In cooperation with Stanford University the Department is studying at San Francisco the pharmacology of insecticidal materials. In Louisiana with the assistance of the Louisiana Agricultural Experiment Station, the Department is investigating the influence of cultural conditions on the composition and workability of juices from different varieties of sugarcane and the prevention of deterioration in harvested sugarcane during short-time storage. In cooperation with the North Carolina Agricultural Experiment Station the commercial fermentation of cucumbers into pickles and related products under southern climatic conditions is being studied.

Commercial development of a process discovered in the Department for producing sweetpotato starch is going forward under the leadership of the Bureau of Chemistry and Soils, in cooperation with the Bureau of Plant Industry and the Mississippi Agricultural Experiment Station, at a plant operated by a farmers’ cooperative association at Laurel, Miss. In cooperation with the Alabama Polytechnic Institute the Bureau of Chemistry and Soils established a laboratory at Auburn, Ala., to promote the industrial utilization of sweetpotato starch. The Chemical Foundation recently established a research fellowship in the Bureau to find new technical sweetpotato starch. Studies are in progress in cooperation with the Mississippi Agricultural Experiment Station on the quality composition of sirups prepared from different portions of sorgo stalks.  Improved methods developed by the Department for making sorgo sirup and sugarcane sirup are being introduced in Mississippi, Alabama, and Florida. The Texas Agricultural Experiment Station recently demonstrated the use of farm-scale equipment in making high-grade sugarcane sirup by the Department’s method.

   Cooperation was extended from the Department to a commercial firm in developing the improved nitric-acid process for producing celluose from bagasse. Cooperation with commercial firms advanced also the technique of utilizing byproduct milk sugar in fondants for confectionery, and in determining the yield and quality of paper pulp from wheat straw, flax straw, cornstalks, and artichoke tops. In the last-mentioned experiments the Department’s investigators used patented equipment designed for the production of paper pulp from straw by a continuous soda cooking process at atmospheric pressure.

FUNDAMENTAL RESEARCH ON PROTEINS AND ENZYMES

Fundamental research in the Bureau of Chemistry and Soils dealt with the chemistry of proteins, enzymes, plant pigments, cuticle waxes of fruits, lignin, turpentine, resin acids, and vegetable oils; also with the chemistry and physics of soils, the chemistry and physics of elements and compounds in fertilizer materials, the pharmacology of insecticides that may contaminate fruits and vegetables, and with microbiology as it relates to food spoilage, food preparation and preservation, industrial fermentations, and the curing of hides and skins. As part of a basic-research program provided for in the Bankhead-Jones Act of June 29, 1935, the Bureau organized three new research projects. These are: (1) Research into the industrial utilization of the soybean and soybean products, (2) the chemistry of enzymes and of enzyme action at low temperatures, and (3) a study of the allergens of agricultural products. In addition, chemists and plant pathologists will cooperate in a Bankhead-Jones project for the study of plant viruses.

The work on soybeans and soybean products is going forward at the Regional Soybean Industrial Products Laboratory, which has been established at the University of Illinois, in cooperation with the agricultural experiment stations of the 12 Corn Belt States. Specialists from the agricultural experiment stations will cooperate with chemists and agronomists from this Department. The object is to improve the quality and increase the yield of soybean products, and especially to develop industrial uses for them. It will include the selection of types and varieties for particular purposes. In the fundamental studies of enzyme action several of this Department’s bureaus will cooperate. Special interest attaches to the little-understood activity of enzymes at low temperatures because such activity affects frozen and cold-storage products in many ways. The work on allergens should yield information about the chemical nature of the plant and animal products known to cause physical ailments such as rash, hives, hay fever, and asthma, in susceptible persons. It has been estimated that 10 percent of the population is allergic.

Anticipating the eventual need for motor fuels other than gasoline, the Bureau of Chemistry and Soils is expanding its investigations into the possibility of producing such fuels economically from farm products and byproducts. One line of research will explore the efficiency of the microbiological conversion of starch and sugars into alcohol or other liquid compounds having fuel value. In the production of industrial alcohol in the past, it has always been necessary to give due consideration to the possibility that the alcohol might be used in such a way that its potability would be of primary importance. However, in the production of power alcohol from farm products potability is not a factor. It is possible, therefore, that fermentative processes based on this conception of the function of the end product may yield greater amounts of liquid fuel at a lower production cost. It is planned to give careful attention to this phase of the liquid-fuel problem. The possibility of using solid fuels, derived from agricultural products, in internal-combustion engines will also receive attention.

THE SOIL SURVEY

Another branch of the Bureau’s work is the soil survey. Fundamental knowledge about the soil is more important today than ever before and more generally appreciated. Efficient farming depends essentially on suitable adjustments in plant-soil relationships, and rational land utilization is impossible without knowledge of the soil and its capabilities.

During the fiscal year 1936 the Soil Survey Division, in cooperation with local agencies, mapped about 20,000 square miles of rural lands in 31 States, Puerto Rico, and Hawaii. This work completed the survey of Puerto Rico and brought the total area covered to more than half the arable lands of the United States. The soil survey of Hawaii will be completed during the present fiscal year.

At the present time the Department is cooperating with the agricultural experiment stations of the seven States having an interest in the watershed of the Tennessee River which, in turn, are cooperating with the Tennessee Valley Authority for expediting the completion of a detailed soil survey of this region. This survey is absolutely essential in developing systems of agriculture for the improvement of the land and the protection of the reservoirs.

Information obtained from the survey of areas in Western States has permitted an extension in the acreage of certain special crops, and has indicated the areas where the accumulation of salts and the development of alkali would be a menace to irrigation projects.

Progress has been made in the development of a system for rating the various soil types according to their productivity for adapted crops and an increasing number of published soil surveys contain tables showing the inherent productivity of the soil as well as its productivity under different systems of management.

The Soil Survey Division prepared a special report on the characteristics and distribution of various kinds of organic soils and peat in the Pacific Coast States. This report paid special attention to the problems of soil conservation and flood prevention.

In July 1935 the Department issued C. F. Marbut’s work, entitled "The Soils of the United States”, which constitutes the final section of the Atlas of American Agriculture. This gives the accumulated results of the Department’s soil surveys and brings into a focus the findings regarding soils as gained by Dr. Marbut and his associates during the last 35 years. It contains maps showing the areas covered by soil surveys up to June 1934, the distribution of the soil groups, the distribution of the parent materials of soils, and the distribution of soils without normal profiles.

An especially important feature 1s a large map of the United States in 12 sections showing the distribution of the country’s soils according to 137 differentiated and 6 undifferentiated soil groups.  There is also information on the classification of soils, their geographic relationships, their derivation and development, and their profile characteristics, as well as their physical properties and chemical composition. This report is the culmination of Dr. Marbut’s life work.

SOIL CHEMISTRY AND PHYSICS

The Bureau of Chemistry and Soils is carrying on research on the chemistry and physics of soils to develop fundamental knowledge on composition and properties which has an important bearing on soil classification, soil conservation, and soil utilization, as well as on variations in the yield, composition, and food value of crops. It is also studying the causes for nonfertility of certain soils, the effects of arsenical insecticides on soils, and the value of peat as a soil amendment.  During the past year several important publications have been issued as a result of these investigations. One of them, Technical Bulletin 484, presents analytical data for eight soil profiles, representing six of the great groups of soils, which show that the colloids of the great groups of soils differ from each other and that there exists a chemical basis for the characteristics of soils as manifested in the field.  Another, Technical Bulletin 482, reports the results of studies on the occurrence of selenium in the soils of the United States. A second bulletin on this same subject is in process of publication.

Additional seleniferous areas have been found which produce toxic vegetation. Results of recent surveys indicate that toxic seleniferous areas are ordinarily found in certain geological formations. New areas where the soils are likely to be seriously seleniferous, judging from geological data, are now being explored. There seems to be no definite relation between the quantity of selenium in a soil and the quantity taken up by plants growing on it. The distribution of selenium in soils has been shown to be very widespread, and its primary source appears to be from volcanic activity. Its occurrence in small quantity in wheat appears to be world-wide.

Soils from the erosion experiment stations were studied with regard to the relationships between their physical constants. The same soils were examined by newly developed methods for certain elements which occur only in minute quantities and are not ordinarily included in soil analyses. Selenium, arsenic, copper, cobalt, nickel, zinc, barium, chromium, and vanadium were found in determinable quantities in each of the 11 profiles examined. The quantities varied from less than 0.1 part per million for selenium, cobalt, and nickel to as much as 708 parts per million for barium.

It is becoming increasingly apparent that these and other trace elements play an important role in soil behavior, as well as in plant nutrition and the food value of agricultural products.  More exact knowledge concerning the chemical composition of soils, including their content of trace elements, will be essential in connection with a very comprehensive and fundamental cooperative research project that is being planned by the Bureau of Chemistry and Soils to determine the effects of soil, fertilizers, climatic conditions, crop rotation, cultivation, and variety of plant on the mineral and other constituents of plants and the value of plants for food purposes.

FERTILIZERS

Fertilizer studies demonstrated that the elimination of filler from fertilizers would save the farmers of the United States about $7,500,000 annually. It appears also that the purchase of double-strength mixtures, which can be manufactured without difficulty, would result in substantial savings. Nationally, the United States is self- contained as regards the principal fertilizing elements, and scientific research in this Department has contributed to the development of commercial fertilizer production. Interest is turning now to the comparatively recent recognition of the fact that mixed fertilizers should contain neutralizing agents to prevent the development of soil acidity. Research is advancing the production of fertilizer mixtures that are nonacid forming. One useful method is the use of ground dolomitic limestone.

Interest is growing also regarding the proper placement of fertilizers with respect to seed and plants, and the Department has developed a granulating process for mixed fertilizers to prevent the segregation of materials. Recent work on calcined phosphate indicates that the plant-food value of this product is as high as that of commercial superphosphate, and that the calcining process offers attractive possibilities for the production of phosphate fertilizer at low cost. A process has been developed in the Department for the production of potassium metaphosphate from potassium chloride and phosphoric acid. This product holds much promise as a fertilizer material because it consists almost entirely of potash and phosphoric acid and does not absorb moisture from the air. Also the Department has developed new compounds of urea with magnesium sulphate and magnesium nitrate which are useful for incorporating the secondary plant nutrient, magnesium, in fertilizer mixtures, as well as nitrogen.

New fundamental scientific knowledge has been acquired through basic research on the chemical and physical properties of elements and compounds contained in fertilizer materials, on the principles underlying catalytic action in industrial nitrogen-fixation processes, and on the fixation of nitrogen by living organisms and organic materials. The facilities of the Bureau of Chemistry and Soils for modern physical and physicochemical research have been used to assist other bureaus of the Department having problems in this field.  Thus, in cooperation with the Bureau of Plant Industry, the effect of X-rays on corn seed and tobacco plants was determined and spectroanalyses were made of the differences in the mineral elements content of toxic and nontoxic specimens of the roots of Tephrosia (Cracca) virginiana (devil’s shoestring) which were under investigation as a source of insecticide.

CHEMISTRY AND THE FARMER

Both hopes and fears cluster about the possibilities of chemical research and its bearing upon new uses for the products and by-products of the farm. Enthusiasts foresee important new markets a quick solution of the whole farm problem. Warning voices say the chemist will synthesize foods in the factory and put the farmer out of his job. Industrial chemistry, they point out, has no particular preference for agricultural sources of raw material and may find what it wants elsewhere. Both the hopes and the fears should be discounted. There is no possibility either that chemistry will solve all the farmers’ difficulties overnight or that it will do away with the need for farms.

   The worth of a chemical discovery depends on the economic as well as the technical factors. Such things as cornstalks and cereal straw, for example, have some value as feed for livestock and as fertilizer. It pays the farmer to sell them for industrial utilization only when he receives more from their sale than they are worth to him as feed and manure. After the chemist has demonstrated that an industrial use for a farm product is possible, the manufacturer must test its commercial feasibility. Also, the farmer should remember that the development of new uses for one of his products may hurt the market for others.

In like manner we may discount the fears generated by the progress of industrial chemistry. Chemists have synthesized a small number of organic compounds formerly obtained from plants, but man must still apply to nature direct for food, clothing, and shelter.  Probably agriculture will always have to produce most of the food substances that man requires, most of the clothing materials, and a good part of the materials required in providing shelter. In any case the change of emphasis is not likely to be appreciable in the near future. For as far ahead as we can see, chemistry will aid and not supplant the farmer.

There is, however, a side of the industrial-utilization problem which should be considered carefully. Chemical discovery, like other aspects of technical progress, is not necessarily an unmixed blessing, particularly to the farmer. If it opens new possibilities, it creates also a need for readjustment, especially when it affects intercommodity competition. For example, the utilization of sugarcane bagasse in the manufacture of rayon may diminish the demand for cotton.  Soybean-oil production, stimulated by a demand for soybean products in the automobile industry, may come directly into competition with cottonseed and other vegetable oils. Sometimes, too, the development of new uses for farm products attracts more people into farming and disturbs the balance between town and country.

Such considerations should not deter chemical research, for science cannot foresee all the probable consequences of its discoveries. That is beyond human wisdom. But the exploitation of particular products is not the only thing to keep in mind. Success in that direction will inevitably benefit some groups more than others, and public agencies engaged in chemical research should cooperate with other branches of the public service in promoting the most nearly equitable distribution of the benefits. There is special need for the collaboration of chemists and economists.

This Department endeavors simultaneously to promote the interests of producers, manufacturers, and consumers, because it is interested not only in the production but also in the commercial utilization and final consumption of agricultural commodities. While the work of the chemist in creating new uses for farm products may temporarily benefit some lines of production to the disadvantage of others, the Department believes the final balance will usually be in favor of the farmer.

It is important to prevent the unscrupulous exploitation of producers or would-be producers on false grounds. There are opportunities in parts of the United States for the culture of the tung tree.  But land unsuited to that purpose is being sold to gullible investors.  The same thing has happened in the case of hemp; and the sale of land is not the only means of diverting technical progress to improper ends. Everyone should understand that hard-headed cost accounting and commercial research are Deen to get the best results and that the laboratory discovery is only the first step, which may not be followed for a long time by the final demonstration on a commercial scale. In the files of this Department are recorded scores of chemical discoveries and innovations, which, though technically successful, remain unutilized commercially for years because the original costs were too high. For example, the Department developed a process, using dilute nitric acid as the pulping agent, for making high-grade cellulose from bagasse. But it was not until ways had been found to cheapen the production of the acid that the process became commercially practicable. Premature exploitation of research findings is a constant source of loss to investors and producers.

UTILIZATION OF DAIRY BYPRODUCTS

Investigations in the Bureau of Dairy Industry to develop ways to utilize whey or its separate constituents more efficiently have given promising results. The whey produced annually in the United States, as a byproduct in the manufacture of cheese, contains about 300,000,000 pounds of milk solids. Yet whey is commonly wasted or used only in limited amounts as feed for pigs and poultry. Dairy investigators have long considered this practice inefficient. They regard the feeding of whey to livestock as justifiable only until better methods of producing human food from whey can be developed. Whey contains nearly half the food solids of milk. It contains all the valuable sugar and at least one vitamin, so that it possesses exceptional nutritive properties. Yet it has found few uses as human food because it has no pleasing taste itself, and no special ways have been developed heretofore for using it. Within the last year the Bureau has found that whey may be used to enrich a variety of food preparations by taking advantage of its chief distinguishing characteristic, which is its lack of casein.

Casein is the substance that causes coagulation in milk under high temperatures or in the presence of acid vegetables or fruits. Manufacturers of vegetable soups can use condensed whey, whey powder, or whey cream in place of normal milk or cream to enrich their products. The whey solids will cause less difficulty with coagulation, the soups will retain their natural color better, they will have the characteristic milk flavor, and a greater nutritive value than soups without milk solids.

The solids can also be combined with highly acid fruit juices, such as orange, grapefruit, strawberry, and similar fruits. Because of the high acidity of the combination little heat is required for sterilization, and these beverages and whips may be canned without a cooked flavor. By varying the combinations, sterilized whips, fruit drinks, and mixes suitable for freezing in a mechanical refrigerator can be made available to the housewife. These are probably only a few of the ways in which whey solids may be combined with other materials to improve old or create entirely new food products.

Young pigs will grow satisfactorily on pasture supplemented with whey, but it is often a problem to adjust the supply of whey to the requirements of the growing pigs. In the flush season there is likely to be a greater supply of whey than the pigs can consume. The Bureau’s investigations indicate that surplus whey can be acidified with an active lactic-acid culture and concentrated at the factory to make an acid product that can be held until it is needed for feeding.  Also, to provide for feeding roughage and whey when pasture is not available, concentrated sweet whey may be mixed with grass or alfalfa and ensiled. Preliminary trials show that pigs will consume this ration and make satisfactory growth.

Information developed in the Bureau’s laboratories has found expression in a number of new commercial ventures. Cheese of the Roquefort type is now being made by a small factory which uses an abandoned coal-mine shaft for a curing room. The ideal natural temperature and humidity conditions of the shaft eliminate the necessity of providing artificial curing conditions. Arrangements have been made to start a similar operation in which a natural cave will provide the right conditions for curing. In one factory, with rooms artificially cooled and humidified, the Bureau’s method for manufacturing a soft cheese of the Italian Bel Paese type has been established. A dairy-byproducts company has built and is successfully operating a factory for the manufacture of lactic acid by fermenting whey.  A large volume of whey is being utilized.

Experimental shipments of concentrated frozen milk have been made to the Canal Zone under the Bureau’s direction, to determine the feasibility of providing fluid milk in the Tropics, on shipboard, and in other places where good-quality milk is unobtainable or the supply is inadequate. Research in the Bureau has demonstrated that milk may be concentrated to one-third of its volume, or less, held at temperatures below freezing for weeks, and then brought back to its original volume by adding water, without losing the characteristics of fresh clean-flavored milk.

ANIMAL INDUSTRY

Superior types of livestock continue to be one of the most promising means of increasing the efficiency and economy of production.  Great variation in the growth of pigs, similar in outward appearance, has occurred at the National Agricultural Research Center, Beltsville, Md. Under the conditions of management and on identical rations, pigs of the same litter varied as much as 100 days in the time required to attain a weight of 225 pounds. And within the same breed the quantity of feed required by different litters to make 100 pounds of gain varied from 325 to 500 pounds. Such observations indicate the feasibility of selecting the breeding hogs that are naturally fast and economical growers. There are indications also that rapid growth is associated with tenderness in meat.

Studies with Danish Landrace hogs imported a few years ago have now reached a stage to permit comparisons with American-bred hogs. When the chilled, dressed carcasses of 40 Landrace hogs and 36 of 2 American breeds were compared, the former had the higher percentage of ham, loin, and bacon and lower percentages of picnic shoulder and head. The higher yield of bacon in the Landrace hogs is especially noteworthy. In general, the Landrace hog excelled in the production of the more valuable cuts of pork.

In the study of more efficient cattle production, the Department has sought a type of animal that will produce beef profitably under adverse conditions of heat and insect pests. Such cattle are especially needed in the Gulf coast region and in other sections having a similar climate.

Crosses between Brahman cattle and several beef breeds already established in the United States have given promising results. Cross-bred types developed from the Guzerat (Brahman) and the Aberdeen Angus breed have shown high adaptability to semitropical conditions. The second generation of calves carrying three-fourths Aberdeen Angus blood and one-fourth Guzerat have, in all instances, been polled and black. A noteworthy result is the increased weight, at weaning age, of cross-bred calves over purebred Aberdeen Angus calves. First crosses, containing 50 percent of the blood of each breed, averaged 455 pounds, whereas Aberdeen Angus calves averaged 391 pounds. Second-cross calves, possessing three-fourths Aberdeen Angus and one-fourth Guzerat breeding, averaged 491 pounds at the same age. These results are in the direction of improvement both in adaptability to the region and in desired market characteristics.

Other breeding studies have been supplemented with tests on the tenderness of the resulting meat. Four years’ experimental work has shown that roasted rib cuts from grade Hereford cattle were more tender than corresponding cuts from cattle of native breeding slaughtered at the same age. These studies indicate the presence of hereditary differences in fat distribution and tenderness.

In a comparison of methods of wintering cattle under western-range conditions experiments showed wide differences in costs. When breeding cows were kept on reserved creek bottom and allowed to sagebrush range supplemented by 83 pounds of cottonseed cake per cow, the wintering cost per animal was $2.84. The cost of wintering similar cows on alfalfa hay at the rate of 765 pounds per was $4.51. Experiments of this kind indicated the economies possible by altering systems of management. When applied to large herds of cattle, even small differences of the kind cited result in large savings and impressive net profits.

A valuable scientific aid in sheep breeding and in the raising of other animals for hair or fur is a device recently developed in the Department’s animal-fiber research laboratory. The instrument makes possible the procurement and study of very thin cross sections of fiber in a few minutes’ time. The various characteristics of fiber associated with suitability for commercial purposes are readily observed by the use of this device. Already it is being used in many fields of industry. Still another instrument developed in the same laboratory during the year makes possible the measurement of length and crimp of wool and hair fibers in a more accurate and efficient manner than with previously available equipment.

FOREIGN BREEDS INTRODUCED

In connection with improvement of animal types the Department has obtained from various foreign sources species and breeds of livestock having noteworthy characteristics. Such stock, introduced 1935 and 1936, includes Nonius horses and Puli sheep dogs from Norwary, red Danish cattle from Denmark, and south Devon cattle, large black hogs, white Austrian turkeys, and White Wyandotte chickens from England. After receiving veterinary inspection and meeting other quarantine safeguards these animals were admitted to Department experiment stations for breeding and feeding studies and related observations. To some extent also they are being used in cross-breeding experiments with selected types raised in the United States.

SECURITY FROM LIVESTOCK DISEASES

Each year the livestock industry of the United States becomes more secure from diseases, parasites, and other pests.  Through methods supplied by scientific research, stockmen and their veterinary allies have recently extended the frontiers of animal health very materially. A brief appraisal of the animal-disease situation at the end of last fiscal year indicates several noteworthy advances in this field.

Bovine tuberculosis has been practically eradicated from 40 of the 48 States in the Union and from 95 percent of all the counties.  There is considerable need, however, for continued retesting of herds to locate and eradicate any remaining infection. Cattle carcasses which, because of tuberculosis, failed to pass Federal inspection at the principal livestock markets numbered less than 10,000 in 1936 as compared with more than 28,000 the previous year. Condemnations of parts of cattle carcasses likewise were much less, being about half as many as during the previous year. A reduction in tuberculosis, though in less degree, was observed. also in swine. These figures, based on official veterinary inspection of millions of animal carcasses, signify a large saving of meat as well as an unmistakably improved condition in the health of cattle and swine.

Extensive public interest in the elimination of Bang’s disease, or infectious abortion, has caused the Department to continue the testing of cattle in cooperation with State officials and livestock owners.  Agglutination blood tests for the detection of this disease were applied to approximately 6,600,000 cattle. About 7 percent were reactors as compared with 11 percent during the preceding year. The elimination of Bang’s disease, which has in the past caused heavy losses and much discouragement in cattle breeding, has resulted in greater optimism among dairymen and others whose herds have thus been placed on a more secure health basis.

In search of an improved diagnostic agent for the identification of cattle affected with this disease, the Department recently developed a biological product known as a stained antigen for the purpose. This product makes possible a rapid whole-blood test, which has several practical benefits over the present slower and more expensive methods of diagnosis. A thorough field trial of the new method was begun by the distribution of sufficient stained antigen for testing 13,000 cattle under Department supervision.

In the eradication of the cattle fever tick the area in continental United States still under Federal quarantine has been reduced to only 9 percent of its original size. The sections still infested with ticks are confined to parts of three States—Florida, Louisiana, and Texas— in contrast to infestation of 15 States when the work began in 1906. Systematic eradication of cattle ticks was recently begun in Puerto Rico.

Control of hog cholera has reached the point where immunization by the serum-virus treatment, developed by the Department, is largely a routine procedure. The method is widely known; serious outbreaks of the disease are infrequent; and the Department has largely relinquished direction of control work to the States. However, it continues to supervise the preparation and distribution of the virus and serum, of which a total of more than 500,000,000 cubic centimeters was produced last year under Federal licenses. As a means of assuring adequate production of these products for possible emergencies, the Department has aided manufacturers in perfecting a marketing agreement directed toward this end.

A NEW IMMUNIZING PRODUCT

As a still further measure of hog-cholera control, the Department recently developed a new immunizing product. Known as crystal- violet vaccine, this product has given distinctly encouraging results in experimental trials. It has provided approximately 99 percent satisfactory protection and has several advantages, including greater safety, over the familiar serum-virus method of immunization. During the last year commercial production of the vaccine on a small scale was sanctioned by the Department in order that this new product might be thoroughly tested under various field conditions. Until the merits of the vaccine are more thoroughly established, however, reliance must still be placed in the serum-virus treatment, the efficacy of which, when properly administered, has been fully established.  A present limitation of the crystal-violet-vaccine method of immunization is its slowness in furnishing protection. Immunity does not appear to be established usually until at least 2 weeks after a hog has been vaccinated.

The drought of 1934, with resulting extensive shipments of livestock, retarded several lines of livestock disease-eradication work.  Some spread of scabies in cattle and sheep occurred in Central and Western States, but scabies of horses now appears to have been eradicated, inspections revealing no cases during the year. The eradication of the horse-disease, dourine, likewise appears to be virtually accomplished, but State authorities are continuing the quarantine of a few areas where the presence of the disease is suspected. Any remaining infection is considered to be very slight, judging from the evidence of only one animal giving a positive reaction to this malady within the last year.

A comparatively newly identified disease of horses and other equines has caused anxiety as well as serious loss in several localities. Known as infectious encephalomyelitis, and occasionally by such nonspecific terms as blind staggers, brain fever, and sleeping sickness, this malady has appeared in no less than 20 States. It 1s caused by an infectious virus which produces nervous symptoms resulting from inflammation of the brain and spinal cord. The mortality is high, and in animals that recover there may be permanent impairment of the brain. Outbreaks occur chiefly during the summer and fall months and in low-lying and moist areas. The use of a specific serum has been helpful in preventing the spread of infectious encephalomyelitis, but it produces only a short-lived immunity. The Department is studying the disease and testing various biological products and drugs reported as being beneficial for its prevention or treatment.

Anthrax caused comparatively slight loss during the year, no serious outbreaks being reported to the Department. Assistance in preventing the disease was given to Indians on reservations where outbreaks occured several years ago. The horse disease, glanders, which at one time caused heavy losses, has been practically eradicated.

Recent research has disclosed several highly effective methods of combating injurious internal parasites, such as adney worms of swine and liver flukes of cattle and sheep. Livestock owners have been quick to adopt and apply the Department’s recommendations. In several instances supplementary benefits derived have greatly exceeded the purpose of control methods.

   For instance, Department investigators have shown that drainage of wet, marshy, and boggy pastures is the most practical procedure for controlling liver flukes.  In several areas these parasites were killing as many as 50 percent of the sheep and stunting or killing calves.  The broadcasting of copper sulphate to destroy the snail intermediate at best, only a temporary expedient and must be continued from year to year in order to insure the destruction of the fresh crops of snails which reappear sooner or later. Drainage, on the other hand, is an effective bulwark against aquatic snails, which invariably perish on dry land. Recently reclaimed boggy meadows contained thousands of dead snails, many of which were the potential and actual conveyors of the liver fluke that is deadly to sheep and injurious to cattle as well as to several species of wild animals.

But besides controlling liver flukes, the drainage of wet pastures has produced a marked change in the type of vegetation, The coarse aquatic grasses containing little or no nourishment for livestock gradually disappear as the pastures become dry; and, as a result of natural seeding, highly nourishing forage, including clover, timothy, and other nutritious plants, take their place. This results in a permanent improvement of the land; and, with reduced water in the soil, the land produces good forage earlier in the spring and later in the fall.

In the Western States where liver-fluke control is in progress drainage of marshy meadows makes considerable water available for irrigation. In Utah, particularly, the water from the drainage ditches is being diverted into irrigation canals, thereby adding materially to the supply of water available for irrigation.  Incidentally drainage of wet and boggy lands has considerable value as a mosquito-control measure.

In short, the control measures for liver flukes are not only effective in reducing serious losses in sheep and stunting in cattle but are also of marked value in arene submarginal lands into productive pastures, adding to the available water supply of areas dependent on irrigation, and aiding in the control of mosquitoes.

Pullorum disease, a major drawback to poultry raising, is being controlled by progressive flock owners through the use of the rapid whole-blood test developed by the Department a few years ago. Commercial production of the stained antigen used last year in making the test was sufficient for testing more than 10,000,000 fowls. Under the provisions of the national poultry improvement plan thus far adopted by 34 States, the Department approves the quality of all this antigen used in official testing, thus insuring a high quality of this diagnostic agent.

Besides these advancements in curbing losses from livestock diseases, the Department has continued its quarantine and inspection services against the possible introduction of infection from abroad. During the year the United States remained entirely free of foot-and-mouth disease, rinderpest, surra, contagious pleuropneumonia, and other maladies that cause heavy losses to livestock owners in some foreign countries.

The increase of about 7 percent in enrollment reported by the 10 federally accredited veterinary colleges of the United States augurs well for continuing the foregoing measures for the protection of the Nation’s livestock.

SUPERVISION OF LIVESTOCK MARKETING

Supplementing its regulatory work of veterinary character, the Department has sought to improve conditions of livestock marketing. Several noteworthy developments of the year resulted from procedures under the Packers and Stockyards Act.

Three cases involving orders of the Secretary which prescribed reasonable commission rates and stockyard charges at Chicago, Ill., and St. Joseph, Mo., were upheld by the United States Supreme Court. As a result legal action has been taken in the lower courts for the return of excess commissions and stockyards charges to shippers. The amount of such returns involved probably will exceed $1,000,000. The decisions of the Supreme Court were important and significant in that they sustained procedures followed by the Department in determining stockyard charges and commission rates.

   Congress amended the Packers and Stockyards Act during the year to include the supervision of poultry marketing in a manner similar to the supervision of the marketing of other classes of livestock. The amendment provides for the licensing of persons engaged in furnishing facilities or rendering services for marketing live poultry in interstate commerce in cities designated by the Secretary of Agriculture. The regulation of rates and practices of licenses is a further provision of the amendment.

   Investigations of the poultry-marketing situation, together with requests:; supervision from a number of cities, resulted in the designation of poultry markets in 15 cities as being subject to Department supervision, up to the close of the fiscal year 1936.

FORESTRY

Most people have regarded forestry as largely a means of assuring an adequate future supply of timber, and it should, of course, be valued for that purpose. “Four-fifths of our commercial forest land, and at least 90 percent of its potential productivity, are in private ownership; and private ownership has not generally endeavored to maintain a continuous timber harvest. It is extremely important, herefore, to promote sustained-yield practices on the publicly owned forest land and to encourage such practices on the privately owned land. Sustained forest production is essential for the general welfare. But forestry has other ends as well, notably the conservation of soil and of water—in other words, the prevention of erosion and floods. Fortunately, the methods which conserve timber productivity at the same time promote the other objects of scientific forestry so that no conflict arises. Curbing forest exploitation is good for the timber industry and also for the public interests that depend upon the forests. This Department recommended, and Congress in part approved during the last year, a program for coping with some of the responsibilities involved.

   That a common interest extends to all forest lands and that private, as well as national, forests ought to be managed on a sustained-yield basis is now generally acknowledged. There is a public, as well as a private, obligation. Accordingly, fire protection by the Civilian Conservation Corps under the direction of the Forest Service is under way on private, as well as public, forest lands. The expenditure on private lands for this purpose has already exceeded $58,000,000. For the current fiscal year Congress has appropriated increased funds for forest-fire protection by Federal agencies in cooperation with the States and with private owners. Forest research carried on by the Forest Service similarly benefits public and private land ownership, through its influence on the utilization, as well as the production, of timber.

Federal acquisition of forest lands through purchase was first authorized in 1911, national forests previously having been set aside only from the western public domain. Prior to 1933, however, the Federal acquisition of forest lands never exceeded 550,000 acres in any one year. The total area approved for purchase was only 4,727,680 acres in the first 22 years of the program. In 1933 Congress authorized accelerated activity, and the area acquired in the 3-year period ended June 30, 1936, exceeded 11,400,000 acres. The acquisitions in the last fiscal year oa 2,998,060 acres. Besides adding to the system of federally owned and managed national forests this accelerated program assured county governments of future revenue from lands that might otherwise have been tax-delinquent, and harmonized with other aspects of the national agricultural policy.  The national forest system now covers more than 170,000,000 acres in 87 States and 2 Territories.

Advantages resulting from the Federal ownership and multiple-use management of forest lands are substantial and varied. They include protection to watersheds, conservation of merchantable timber, scientific management of more than 83,000,000 acres of livestock range, preservation of wildlife, particularly big game and fish, provision of recreational facilities, and soil and water conservation, with resulting benefit to power development and irrigation. They afford innumerable opportunities for recreation; more than 17,000,000 persons visited the forests last year for rest and relaxation. Administered by the Forest Service under a system of coordinated use, our national-forest. resources furnish support directly to more than 1,000,000 persons. Modern forestry thus includes more than producing continuous crops of timber. It comprises the planned management of forest, range, and wild lands, and of their many resources; it has to do with conservation through the use of organic resources and services in the interest of general welfare.

FOREST PROTECTION AND FLOOD CONTROL

How important it is to protect forest, range, and other vegetative cover so as to retard the water run-off and prevent erosion becomes evident when floods occur. For example, Pickens, Frankish, and San Dimas are mountain canyons opening out into fertile valleys of southern California. Fire denuded 5,000 acres in Pickens Canyon in 1933.  Fire similarly swept Frankish Canyon in 1935. Fire did not visit San Dimas Canyon. On New Year’s Day 1934 a flood swept out of Pickens Canyon, destroyed 200 homes, and killed 84 persons. Though the same storm hit nearby San Dimas Canyon, it caused no flood there.  This year in January and February floods swept out of Frankish Canyon through the cities of Upland and San Bernardino. Though the same storm struck the unburned San Dimas Canyon, it did not precipitate a flood there.

Near Centerville, Utah, in 1930 overgrazing was the primary cause of a flood which wrecked homes and buried orchard lands under soil, rock, and debris. There was no flood from a nearby watershed that had been properly grazed. Floods come less frequently and have lower crests where a vigorous vegetative cover remains.

Reservoirs and distributing systems that carry water to some 20,000,000 irrigated acres had a value in 1930, according to the census, of more than $1,000,000,000. Many billions have been spent for downstream engineering to control floods that start with small streams and additional sums for removing silt from navigable waterways. The Federal Government has incurred most of this expense. Yet it has invested less than $70,000,000 to purchase lands where floods and erosion begin, and less than $14,000,000 for replanting denuded forest and range lands. One of the best and cheapest ways to prevent soil erosion and combat the danger of floods is to reclothe denuded slopes with forest and other vegetative cover. In dealing with the flood problem, prevention is better than cure.

As a flood-prevention measure, the Federal acquisition of 81 million acres of lands on important watersheds in 27 States east of the Rocky Mountains has been recommended. Such lands should be protected, revegetated where necessary, and administered as parts of our existing national forests. The Forest Service has outlined an expanded program and recommended it to Congress.  Preventive measures in foothills and mountains will help to conserve investments already made in downstream engineering. Without such preventive measures the work downstream may not have much effect.

In the fall of 1934, following the great drought of that year the Forest Service began to plan shelterbelts in the Great Plains. Such shelterbelts serve as barriers against soil drying and wind erosion.  They help to catch and retain snow, and to delay the surface run-off.  The shelterbelt planting was not started until the problem had been thoroughly studied, surveys made of existing shelterbelts, and analysis completed of 25 years’ experimental work by Federal bureaus and State agricultural colleges. By agreement with farmers, the Forest Service planted about 7,000 acres in the spring of 1935. This year it planted nearly 24,000 acres, using 23,000,000 trees in the work.  Examinations in June of all the plantings revealed an average survival of 81 percent, a highly satisfactory figure for any forest-planting operation. However, Congress decided to discontinue the Plains shelterbelt project and appropriated $170,000 to conclude the work and to dispose of the trees still remaining in the nurseries.

REPORT ON RANGE RESOURCES

In response to Senate Resolution 289 (74th Cong., 2d sess.), this Department made a special report on the original and present condition of our range resources. The report was prepared by the Forest Service. As required by the resolution, it dealt with the factors that have led to the present condition of the range, with the social and economic importance of range use and conservation, and with methods for restoring its productivity. Various Federal and agencies furnished data for the report.

The western range is much larger and more important to the national welfare than most people realize. It includes some 728 million acres, or nearly 40 percent of the total land area of the country.  It is the mainstay of a 4-billion-dollar western livestock industry, and includes four-fifths of the principal water-yielding areas on the watersheds of major western streams. Low precipitation makes water the limiting factor in nearly all western development.

In the range country in 1930, according to the census, there were 775,745 farm units and nearly 400,000,000 acres of land in farms.  Normally these farms grow 35 percent of the feed for western livestock. Except for highly specialized crop farming, mostly on irrigated land, western agriculture is primarily an integration of range- livestock grazing and crop farming.

Forage depletion for the entire range area averages more than 50 percent—the result of a few decades of livestock grazing. Range depletion on the public domain and grazing districts averages 67 percent; on private lands about 50 percent. Seventy-six percent of the area is still on the downgrade. No less than 589 million acres of range land is eroding more or less seriously, reducing soil productivity and impairing watershed services. Three-fifths of this area is adding to the ph a of major western streams. An outstanding cause of range depletion has been excessive stocking. Some 17.3 million animal units are now grazed on ranges which it is estimated can carry only 10.8 million.

Severe recurrent drought has contributed to this overstocking. Stockmen have been forced to damage the range, in order to meet their immediate obligations. Unsuitable land laws have made the range a bewildering mosaic of different, kinds of ownerships and of uneconomic units. Most spectacular among the maladjustments of range-land use has been the attempt to use more than 50 million acres for dry-land farming. About half of this area, ruined for forage production for years to come, has already been abandoned for cultivation.

The national forests furnish indispensable summer range. The 83 million acres grazed by domestic livestock has improved so that it is now depleted only 30 percent; important water-yielding areas on national forests are being afforded proper watershed protection and it has been necessary to exclude livestock from only a comparatively small area. Research carried on by the Forest Service is showing how to manage range lands for stable forage and livestock production, how to reseed severely overgrazed range and abandoned dry farms in the range area, and how to coordinate grazing use with erosion prevention, flood control, and water delivery, tree reproduction, wildlife, and recreation.

PLANT RESEARCH

Excellent results continue to be secured with the two outstanding varieties of upland cotton introduced and developed by the Bureau of Plant Industry. These varieties are Acala and Lone Star. These two cottons, with the strains and varieties developed from them, are now annually planted on more than 1,000,000 acres in the Cotton Belt, distributed from Georgia to California. Practically the entire upland cotton acreage in the irrigated valleys of the Southwestern States— Texas, New Mexico, Arizona, and California—is planted to Acala. Because of its productiveness and superior quality of fiber, Acala has become outstandingly popular with growers in parts of Oklahoma and Arkansas, and in test plantings conducted for several years at State and Federal stations in Texas, Acala has been shown to be especially well adapted to the great blackland soil area of that State.

   One of the outstanding results of the past year’s work concerns the Hopi cotton, a small-boll type grown, probably for centuries, by the Hopi Indians in northern Arizona. This cotton has a staple only thirteen-sixteenths of an inch long, but fiber studies and spinning tests by the Bureau of Agricultural Economics show that it approaches sea island in fineness and produces a yarn as strong as that made from 1 5/32-inch upland cottons. The 14-inch fiber from a first-generation cross between Acala and Hopi produced a yarn as strong as that derived from 1½-inch upland cotton.

Interest in sea-island cotton has greatly increased, both among former growers and among manufacturers desiring this finest of the world's staples for special textile purposes, In spite of the many hazards of production under weevil conditions in the Southeastern States, about 700 acres were planted in 1935 in northern Florida.  Seed for this acreage was the increase from a small reserve stock furnished by the Bureau in 1934, through the Florida Extension Service, to a few growers for experimental demonstrations. Only 15 bales were prooduced on the 175 acres planted in 1934, but 170 bales were produced on the 700 acres planted in 1935, and sold at prices ranging from 25 to 28 cents a pound. As a result of the more favorable returns in 1935, about 4,000 acres were planted in northern Florida and southeastern Georgia in 1936.

The need for developing earlier and more prolific strains of sea island or a substitute for this cotton better adapted to present conditions has become acute.  Special studies are being made, therefore, of hybrids between sea island and outstanding upland long-staple varieties to find a type combining the long, silky quality of sea-island fiber with the larger bolls and earlier maturity of upland. Approximately 8,000 hybrids were made in 1935, about 3,000 of these being sea island crossed on upland and 5,000 upland crossed on sea island. A system of convergent crosses, in which hybrids are back-crossed to one or both parents, is being used in an effort to establish pure strains having the desired combinations of fiber quality and plant characteristics.

Among the extra-staple upland cottons showing special promise as a substitute for sea island is a selection out of the Tidewater variety developed by a former sea-island breeder near Charleston, S. C., in cooperation with specialists of the Bureau. The new strain is much more productive than sea island, has bolls about twice the size, and produces a fine quality of fiber 1½ inches long. The stock is being further selected and used in the hybridization work with sea island.  Improved strains of Meade, an early upland variety, with fiber similar to sea island in length and quality, are also being developed for use in the studies of extra-staple cottons adapted to production in the Southeastern States.

The most important result in Egyptian-type cotton breeding during the past year is the establishment in commercial production of the SxP variety, derived from a cross between Sakel, the longest in staple of the Egyptian varieties, and the Pima variety of Arizona.  Approximately 1,700 acres of SxP were grown in the Salt River Valley in 1935, and the yields were so satisfactory and the market for the product was so active that the demand for planting seed in 1936 greatly exceeded the supply. Some 10,000 acres of this variety are being grown in 1936 in the Salt River Valley and neighboring districts. Production on this scale should determine definitely the position of this cotton in the markets as compared with that of Pima.  If SxP can be substituted satisfactorily for Sakel cotton, large quantities of which are imported annually into the United States, a considerable expansion of the acreage of Egyptian-type cotton in the Southwest would be likely to result, and increased production should place the American-Egyptian industry upon a more stable basis.

GRAINS

The stem rust epidemic of 1935 was perhaps as severe as or even more so than those of 1904 or 1916. Late seeding in the spring wheat belt, delayed maturity of winter wheat in Kansas and Nebraska following late germination due to a dry fall and winter, a rank growth of wheat late in the season, unusually favorable conditions for the development of the rust, and an abundance of inoculum from the wheat fields of Texas, combined to produce the most widespread epidemic in the history of the Great Plains. The loss in North Dakota alone has been estimated at more than $100,000,000 and losses were proportionately as great in South Dakota and Minnesota. The winter wheat crop also suffered though not to so great an extent.

The Thatcher variety of wheat, produced as a result of research by this Department and the Minnesota Agricultural Experiment Station and distributed to farmers last year, withstood the epidemic remarkably well. Nominal damage only was suffered by this variety as compared with complete or nearly complete failure for the Marquis variety under similar conditions. Ceres, which is somewhat resistant to rust, was also severely injured, though not to so great an extent as Marquis. Thatcher has proved acceptable to the grain and milling trade and popular with farmers. The acreage is being rapidly increased.

Three other new varieties of wheat, produced as a result of the cooperative work of the Bureau, have recently been distributed to farmers. Rex, produced at the Moro and Pendleton, Oreg., field stations, was first grown commercially in 1934. Several thousand acres were seeded for the 1936 crop. The chief characteristics which commend this variety to farmers are its resistance to the principal races of bunt occurring in the Pacific Northwest, early maturity, winter hardiness, stiff straw, resistance to shattering, and high yields. It is recommended principally for the area south of the Snake River in Washington and Oregon.

Hymar, produced at the Washington Agricultural Experiment Station, is also highly resistant to the races of bunt most generally prevalent in the Pacific Northwest. It is popular with farmers chiefly because of a relatively high test weight and high relative yields with favorable conditions with respect to moisture. It is grown chiefly in the Palouse area of Washington north of the Snake River.

The quantity of water in the soil at seeding time is definitely related to the yield of winter wheat. Recent analysis of soil-moisture and crop-yield data obtained in experiments extending over a period of 26 years in the central Great Plains has developed principles by which the farmer may recognize at seeding time conditions that indicate high probabilities of failure or success and regulate the seeded acreage accordingly. The depth to which the soil is wet can be determined by observation, and is a good measure of the quantity of water in the soil. The prospect: of a good crop increases with the depth to which the soil is wet. When wheat is planted in a dry or early dry soil, the probability of success is extremely low. At three stations in western Kansas the chances were 71 out of 100 that he crop would be a failure (4 bushels or less per acre), and there ere only 18 chances in 100 of producing a 10-bushel or better yield. When the soil was wet to a depth of 3 feet at seeding time, the chances of failure were reduced to 10 in 100 and the chances of producing a 10-bushel or better crop were 84 in 100.

When little or no rainfall occurs soon after a in soil moist to a depth of only a few inches, the probability of failure is greatly increased. When the initial soil moisture is deficient and the precipitation is low to April 1, it is probable that abandonment of the crop and the conservation of water in a summer fallow for a future op will pay far better than allowing the water to be wasted by the poor crop and the weeds on the land.

Much of the hazard of winter-wheat production in the central Great Plains can be avoided by limiting the acreage in years when wheat must be planted on soil that is not wet to an adequate depth.  In some sections a summer fallow for an entire season may be necessary to store the necessary quantity of water, and in sections with heavier precipitation cultivation beginning immediately after harvest may be sufficient in most seasons. In particularly dry seasons no method of cultivation may be able to provide the necessary protection.

Fifteen varieties of oats, developed by breeding mostly in cooperation with the Iowa, New York, Oregon, and Idaho Agricultural Experiment Stations, were distributed from 1913 to 1931. These improved varieties are now grown on 10,000,000 to 15,000,000 acres annually. Among these varieties Richland and Iogold are highly resistant to stem rust, and Markton is extremely resistant to smut.  These varieties have been crossed with others resistant to crown rust, and certain of the hybrid selections from the crosses are resistant to all three diseases and in addition are very promising in yield.

Eleven corn hybrids developed in cooperation with the Iowa, Illinois, and Indiana Agricultural Experiment Stations were distributed during the period from 1932 to 1934, inclusive, and were grown on nearly 115,000 acres in 1935. Each of these hybrids has yielded an average of 12 to 26 percent more than good local varieties in comparative tests during the last 4 or 5 years. These hybrids also have been much more resistant to lodging than the open-pollinated varieties with which they have been compared.

Experiments with newly developed early mneburig varieties, such as Sooner milo, indicate that they may be planted as late as July 1 or 15 in most of the commercial grain sorghum producing areas and still mature a crop of grain. For late planting, certain of these newly developed varieties are far superior to the ordinary varieties that are more productive when planted early. Sooner milo has matured and yielded satisfactorily as far north as South Dakota, and also under irrigation at Logan, Utah, in the intermountain region.

The root-rot disease attacking milo and darso has been found to be caused by the organism known as Pythium arrhenomanes Drechs. This organism occurs in the soil of many localities and attacks corn and sugarcane and certain varieties of sorghum. This disease can be controlled by the use of resistant varieties. Resistant strains of milo have been selected by the Kansas Agricultural Experiment Station in connection with cooperative studies of the disease. Susceptibility to the disease is inherited in a simple genetic manner.

The “white-tip” disease of rice has been demonstrated to be caused by an iron deficiency. The disease is characterized by a loss of chlorophyll from the leaf tips and by chlorotic spots in older leaves. Plants severely affected have dwarfed, twisted culms and twisted leaves and panicles, a condition that results in a marked reduction in yield. Some varieties are less susceptible than others. In greenhouse experiments the deficiency of iron, which is associated with an alkaline soil condition, was corrected by applications of calcium cyanide, sulphur dust, or ammonium sulphate.

GRASS AND PASTURE

Ecological studies in the central and southern Great Plains to determine the effect of heat and drought on native grasses were made at eight different stations in this region in cooperation with the Kansas Agricultural Experiment Station, and the Division of Dry Land Agriculture, and the Soil Conservation Service of the Department. Buffalo grass and blue grama constituted more than 90 percent of the total vegetation on all soils except those which were very sandy. Buffalo grass was more abundant than any other grass on the heavier soils, but blue grama was found to be adapted to a much wider range of soils. A large percentage of the native grasses were killed during the drought in 1933-34. Soil blowing and overgrazing contributed materially to the damage, but heat and drought caused much more injury than grazing. As the intensity of grazing was increased the actual ground cover of buffalo grass decreased. Heavy grazing and drought caused more injury to blue grama than to buffalo grass. Pastures were severely injured by the drought but surviving plants remained evenly distributed so that with favorable climatic conditions and proper management recovery to normal stands should be possible in a few years.

Woolly fingergrass introduced from South Africa was grazed for the first time at Tifton, Ga., in comparison with other grasses. This grass, planted vegetatively in 1934 on unfertilized Tifton sandy loam soil and with an incomplete stand, carried for 216 days three head of steers with an initial average weight of 443.3 pounds. The average gain per steer was 340.3 pounds or a daily average gain of 1.58 pounds per head. This was the largest daily gain on any grass pasture at Tifton, and these steers were in better condition than any others. Comparable steers on a pasture of carpet grass, Dallis grass, lespedeza, and white clover fertilized annually with 600 pounds per acre of complete fertilizer made an average daily gain of 1.40 pounds per head. Bermuda grass and lespedeza produced an average daily gain of 1.02 pounds per head, and kudzu was the only type of pasture at Tifton on which the daily gains of the steers exceeded those of the woolly fingergrass pasture, the average for kudzu being 1.60 pounds.  The introduction of woolly fingergrass has revived hopes of providing productive pasture on poor upland soils of the Cotton Belt.  It is both palatable and nutritious but, unfortunately, has failed thus far to produce viable seed. Breeding designed to overcome this weakness was begun this year.

During the past year, three new lettuce varieties or strains have been released to the seed trade. One of these varieties released to seedsmen under the designation Columbia No. 1 is a crisp heading sort similar in appearance to the New York and is adapted to culture in the eastern part of the United States. It appears to be reistant to tipburn and better adapted to eastern conditions than any strain of the New York type of lettuce previously grown. Another variety is a midseason or summer crop, one adapted to the Salinas-Watsonville section in California and designated as Imperial 847. It appears to be brown blight-resistant. The third variety of the group is a mildew-resistant strain of the Grand Rapids variety for greenhouse culture. It has been released under the name Grand Rapids No. 1.

FERTILIZER PLACEMENT

In cooperative tests having to do with the placement of fertilizer in the soil with reference to the position of the tobacco plant, striking results were obtained with respect to both the survival of transplants and the final growth and quality of the crop. Perhaps the most critical period in growing the tobacco crop is that immediately following transplanting, a good stand and a quick, even start in growth being highly important. Certain placements of the fertilizer resulted in a high mortality of plants, so that although the crop was planted two to four times perfect stands were never obtained and growth of the surviving plants was irregular. Side placements have produced uniformly good results, whereas mixing the fertilizer in the band of soil from 4 to 6 inches in width and depth around plant gave poor results. When the fertilizer was placed in a band underneath the plant, the results were unsatisfactory. Where the fertilizer was drilled in the open furrow and stirred with the and the row then ridged, the results as a rule were good, although they did not equal those obtained with the side placements. Split applications of fertilizer, with a portion applied to the side, usually produced the highest yield and value of crop obtained in the In comparative tests with standard-strength and high-analysis mixtures, the results obtained were in close agreement.

On some of the principal cotton-producing soils of the Southeast the reinforcing of fertilizers with magnesium and calcium neutralizing agents has rendered fertilizers more effective in the growing of cotton. When fertilizers are made nonacid-forming, the less costly soluble organic and inorganic sources of nitrogen may be as efficient on many cotton soils as the more expensive natural insoluble organic sources of nitrogen and all the fertilizer may be applied at or in advance of planting on many soils without serious danger of loss by leaching. The application of such fertilizers at planting tends to reduce the production cost of cotton when compared with the system of applying the mixture containing part of the nitrogen at planting and the remainder as a separate application after the crop isup. Fundamental work with machine placements of fertilizers to cotton, in cooperation with the Bureau of Agricultural Engineering, has shown side placements to be the most satisfactory. Efforts are being directed toward devising practical and inexpensive means of accomplishing this placement of fertilizer.

WILDLIFE

With allotments from emergency funds aggregating $8,500,000, the Bureau of Biological Survey on July 1, 1934, undertook the task of averting the most serious crisis with which waterfowl in this country have ever been faced. Of this amount, $8,100,000 has been expended, and the balance has reverted to the Treasury.

The most protracted drought in our history, drainage operations, and attempts to reclaim land for agricultural purposes had combined to bring about an extremely serious shortage of waterfowl breeding, resting, feeding, and wintering grounds. This condition, augmented by an increase in botulism and other waterfowl diseases, large-scale hunting activities, and the toll taken by predatory animals had so alarmingly reduced the waterfowl population as to forecast extinction of many species within the space of the next 5 years unless preventive steps were taken at once.

To save waterfowl and restore them to approximately their former abundance was and is the primary consideration of the Survey’s activities, but it should not bs overlooked that these activities constitute a powerful weapon in the battle toward economic recovery and reconstruction. This will be evident from consideration of the following integral parts of the duck-restoration program:

   1. Purchasing large areas of submarginal land, which in practically every case has proved entirely unfit for agricultural usages. The sale of their land has enabled distressed farmers to move to more desirable locations and start anew.
   2. Employment by the Survey of a large number of men, many of whom were on relief rolls. This is especially important, since, in the main, these activities are located in drought-stricken areas that have been the hardest hit by the depression.
   3. The construction of storage dams, marsh embankments, and other water-impoundment devices in the course of the development of practically every wildlife refuge. These improvements will conserve valuable water resources which are now being dissipated to an alarming degree. The drought has emphasized the need for the conservation of water, and the popularity of the Survey’s activities in the Dakotas, for example, shows that there is great public interest in this phase of conservation.
   4. The propagation and protection of heavy growths of vegetation for waterfowl food and cover. Such work forms an important part of the refuge-development program and helps to repair the damage which the uncontrolled action of wind and water has inflicted.

Between $800,000,000 and $1,000,000,000 is spent annually for sportsmen’s equipment and outdoor facilities, and a million people depend wholly or in part upon some aspect of this business for their livelihood. In addition, there is the fur industry, with an estimated $500,000,000 annual turn-over in retail trade. The threat to industries such proportions obviously merits attention.

The educational and esthetic value of wildlife is important, and laboratory facilities are being provided on a number of the waterfowl refuges. The fund of data in the natural sciences will thus be enriched. The hunting, as well as the observation, of waterfowl furnishes millions with healthful recreation. On many wildlife refuges the Survey is developing picnic grounds and bathing facilities for the use of the public.

The total acreage of bird-refuge land actually administered by the Biological Survey as of February 29, 1936, exclusive of the acreage of those refuges located in Alaska, Hawaii, and Puerto Rico, and exclusive also of a large acreage of big-game land on which birds are also protected, is 2,118,433 acres and includes more than 100 refuges. There are additional areas on which options for purchase have been approved by the Migratory Bird Conservation Commission. These areas total some 999,398 acres and include 36 areas that are now, or soon will be, functioning as waterfowl refuges through special permits from the owners. Thus it may be said that there are now under the Bureau’s jurisdiction over 3,000,000 acres of bird-refuge land.

BIG-GAME REFUGES

   Two outstanding big-game refuge projects have been inaugurated under the $6,000,000 appropriation approved June 15, 1935. One of these provides for the enlargement of the Elk Refuge in Teton County, near Jackson, Wyo., to take care of the great bulk of the elk of the southern Yellowstone herd which winter in the Jackson Hole country. This project involves the acquisition of 20,000 acres to be administered in connection with the 4,500 acres already owned and operated at that point. Roughly, the area includes the land lying north of Jackson, east of the Jackson-Moran Highway, south of the Gros Ventre River, and west of the boundaries of the Teton National Forest. The elimination of private interests from this area and the restoration of grazing therein will provide an abundance of winter feed for the elk. This project is very important.

The other project is known as the Hart Mountain Antelope Range, in Lake County, southeastern Oregon. It has been established by Executive order in connection with the organization of grazing districts under the Taylor Act. The purchase of some 25,000 acres of privately owned lands has been initiated under the 1935 appropriation above mentioned.

Other pending projects for the designation of ancestral game ranges have been agreed upon in connection with the grazing districts being organized under the Taylor Act.

Improvement of big-game refuges by C. C. C. camps has continued at the National Bison Range, Mont.; the Niobrara Game Preserve, Nebr.; the Charles Sheldon Antelope Refuge, Nev.; and the Wichita Mountains Wildlife Refuge, Okla.

Federal authority over migratory birds will be reinforced and extended by an act of Congress approved June 20 to give effect to the convention between the United States and Mexico for the protection of migratory birds and game mammals. The United States Senate on April 30 consented to the ratification of the treaty. Mexico has not yet ratified the treaty. It will take effect on the exchange of ratifications. Federal authority over migratory birds has heretofore depended on the Migratory Bird Treaty with Great Britain, The new treaty reinforces this authority by providing for a dual basis for the Federal regulations conserving ducks, geese, and other migrants.

With the signing of an agreement by State agencies in Ohio, nine States are now cooperating with the Biological Survey in investigations to learn how to increase, maintain, and use wildlife resources and to show on trial areas how research results can be applied. The cooperating States are Alabama, Connecticut, Iowa, Maine, Ohio, Oregon, Texas, Utah, and Virginia. These were selected for research on a regional basis and to avoid duplication of effort. Each State program is arranged so that the information obtained may be applied in a large area.

AGRICULTURAL ENGINEERING

The best regulation and use of the waters of at least 11 of the Western States depend upon reliable forecasts of stream flow. Advance knowledge of stream flow is indispensable to the proper operation of irrigation, hydroelectric, and flood-protection works. In the making of such forecasts, however, adequate snow surveys are necessary, and snow surveying has not yet reached the required proportions. Accordingly, the Bureau of Agricultural Engineering, in cooperation with other Federal and State agencies, is planning several hundred new snow courses for survey during the winter of 1936-37.  This undertaking will extend the snow-survey work into areas not now served.

This Bureau has had the responsibility of coordinating, standardizing, and extending the snow-survey work of various agencies.  It issued forecasts of the 1936 season’s water supply for the greater parts of California, Oregon, Nevada, Idaho, Utah, Wyoming, and Colorado shortly after April 1936. These forecasts indicated that most of the streams would yield 100 to 125 percent of the normal supply and that the run-off would equal the highest recorded in the last 10 years. With this assurance, irrigators prepared to plant all the area that had heretofore been irrigated.

However, the unusually warm spring resulted in a very early and very heavy run-off. In areas having inadequate storage facilities much water ran to waste; and in some areas little irrigation water was left for late-season needs. Warned against planting late crops, farmers adjusted their cropping programs and avoided certain loss. Where long snow-survey records were available, it was possible to distribute the water among the storage reservoirs in such manner as to effect the greatest economy in its utilization.

   The net safe yield of water for irrigation from western watersheds depends upon reservoir storage. Evaporation from lakes and reservoirs results, however, in a material loss. This loss is largely unavoidable, but knowledge of its magnitude and of the factors that influence evaporation helps in devising means for reducing the loss, in estimating the available reservoir supply, and in determining the feasibility of reservoir-construction projects. It is useful also in planning irrigation, municipal water supply, and hydroelectric projects. The data collected by the Bureau provide the basis for estimating the evaporation losses from the surfaces of stored water and from water transported long distances in open conduits.

   The best use of water requires an understanding of soil characteristics, particularly those related to the absorption and retention of water. Studies of the rate of movement of capillary moisture have high practical value in determining soil-moisture conditions, with or without irrigation. Studies of the infiltration of water into the soil indicate what types of soils can best-be irrigated, and how land should be prepared for irrigation. Research in the Bureau of Agricultural Engineering is throwing new light on these problems.

Irrigation to protect high-value crops against drought is receiving increased attention in the Eastern States. Where sufficient water can be had at reasonable cost, the practice is profitable in growing fruits and vegetables. In the spring of 1936 irrigated strawberries on the Eastern Shore in Maryland produced an excellent crop of high-grade berries. The increased income this year practically paid the cost of installing the irrigation equipment. Adjacent unirrigated fields, because of drought, produced no marketable berries. Profitable results from irrigating fruits and vegetables were reported also from Florida, Michigan, New Jersey, Ohio, Virginia, and West Virginia. But results from the irrigation of general field crops in the East do not as a rule justify the expense.

Common tillage practices in the production of cotton can readily modified so as to increase the yield and lower the cost of production on at least; one soil type—Greenville sandy loam. This has been discovered in tillage experiments carried on for 5 years at Prattville, Ala. The methods and the tools used in tillage influence both fiber length and yield. Operations repeated each year with implements that improve or injure the soil structure have a cumulative effect, on the crop. The depth and the method of turning under “green manure crops also influence the yield of cotton on this soil.

IMPROVED FARM EQUIPMENT

New or improved equipment is being put out by farm-machinery Manufacturers partly as a result of investigations by Department engineers. This machinery includes (1) fertilizer distributors that place the fertilizer, during the planting operation, at the proper distance to the side and below the seed to be of greatest benefit to the crop; (2) the variable-depth cotton planter, which eliminates the necessity for replanting except under extraordinarily unfavorable Weather conditions; and (3) a basin-forming attachment for the lister when used in planting corn, designed to form dams at short intervals in the lister furrows to conserve moisture by holding rainfall and to prevent or reduce erosion by water and by wind.

Farm-machinery sales have increased. Information received by the Bureau of Agricultural Engineering indicates that the value of all the equipment sold in the United States by manufacturers in 1935 was $325,566,909, as compared with $248,979,523 in 1931, Sales during 1936 will probably exceed $400,000,000. Much of the increase will be due to the sale of newer types of equipment, such as the general-purpose tractor on pneumatic tires, and the small combined harvester-thresher. It is estimated that no fewer than 7,500 combines operated from the tractor by power take-off and mounted on pneumatic tires were used this year in the Corn Belt and the Southern States. These machines harvest a variety of crops satisfactorily, particularly soybeans and small grain. The power take-off, which of course does away with the need for an engine on the combine, reduces the cost. of the machine greatly; and the pneumatic tires make lighter construction possible. Though the small machines have a narrower cut than the machines formerly in common use, the rate of harvesting is not proportionately lower, because the smaller machines can be pulled at higher speeds.

Tests conducted at the Department’s cotton-ginning laboratory at Stoneville, Miss., have attracted wide interest. Many ginners are modernizing their gins and following the recommended methods. In the 1935-36 ginning season 200 seed-cotton driers, built on a principle patented by Department engineers, conditioned about one-third oF a million bales of damp cotton for ginning. About 300 such driers may be in operation in the 1936-37 ginning season.

In buildings for the storage of fruits and vegetables in commercial quantities, especially in cold climates, the control of temperature and humidity (or air-conditioning) is important not only for the safe and economical holding of the crop but for the prevention of damage to the buildings. Investigations of potato storage by this Department in cooperation with the Maine Agricultural Experiment Station have developed an improved method of obtaining the desired air conditions. These methods take advantage of the well-known fact that moist air coming in contact with a cold surface deposits moisture, and in so doing liberates about 1,000 British thermal units of heat per pound of moisture condensed. In this way the walls of the storage house are dampproofed and the a is insulated more than the walls, so that high humidities to aid in keeping the potatoes in good condition can be held without damage to the building. In cold weather excess moisture given off by the potatoes is drained away as water, with much less loss of heat from the building than if it were carried away as vapor by ventilation. Heating and ventilation during cold weather are reduced to the minimum and loss of weight by the potatoes is lessened. The same principle is applicable to the storage of other vegetables and fruits. With some modification it may be useful in buildings for livestock and for other purposes.

IMPROVEMENT OF FARM HOMES

The improvement of farm homes remains one of the unaccomplished tasks of agriculture. Observations in many parts of the country indicate that comparatively few farm families have as yet found it practicable to provide themselves with modern homes either through new construction or by modernizing the old dwellings. Sooner or later there must be a tremendous volume of farm-home improvement and new construction. Therefore this Department, in cooperation with the State Universities of Wisconsin and Georgia, is gathering facts about the comfort and service provided by various types of farmhouses found in the North and in the South. One phase of the investigation deals especially with the factors in house design that contribute to comfort in hot weather. The results should aid materially in the development of improved designs.

GRADING AND STANDARDIZATION

A new principle entered the grading and standardization work of the Department this year. It was the use of the referendum to decide whether or not a group should have mandatory inspection based on Federal standards for market quality and condition.

This new development was provided for in the Tobacco Inspection Act, signed in August 1935. Permissive inspection, which began in 1929, has demonstrated the feasibility and practical value of tobacco inspection based on standard grades. Several referenda indicated that tobacco growers in large numbers want mandatory inspection. They see in it a means of reducing the costs and improving the efficiency of marketing and distribution.

The tobacco-inspection service has for its object the certification of the grade on each lot of tobacco offered for sale at auction. It is designed to overcome the average producer’s lack of technical knowledge of the qualities and values of his tobacco and to improve the general technique of marketing the crop. It is coupled with a price-reporting service that gives the current average prices for the various grades. These two services enable the grower to have, at the time he sells his tobacco, a competent and disinterested judgment on the quality and approximate market value of his offering.

As a result of favorable votes in several referenda, mandatory inspection service has been ordered for 18 tobacco markets, and another market has voted favorably on the matter and will soon be designated. The law, however, has been challenged in the courts, and a temporary injunction issued, which for the time being stops the grading of tobacco on three designated markets in South Carolina.

The first official inspection service known to have been provided

for any agricultural commodity was a tobacco-inspection service. It was passed by the Virginia House of Burgesses in 1619. Since then much legislation pertaining to tobacco inspection and to other phases of production and commerce in tobacco has been enacted. However, the Tobacco-Inspection Act is the first piece of national legislation providing for tobacco inspection that has had for its primary object the protection of the producer’s rights and interests when he offers his tobacco for sale. The first State legislation of a similar character was enacted by Virginia in 1933. It related to fire-cured tobacco, type 21, which is produced in a group of counties south of the James River.

An educational program has been started in connection with the mandatory tobacco inspection and the market-news service to promote improved methods of sorting tobacco and preparing it for market. This program is limited at present, but it has met with an encouraging response from county agents, agricultural teachers, farmers, and the tobacco trade.

PERMISSIVE FEDERAL STANDARDS

There has been for many years an extensive use of Federal standards on a purely permissive basis. Along with the use of mandatory Federal standards for cotton and grain under certain interstate marketing conditions, the voluntary use of optional Federal standards has developed. Progress has been particularly noteworthy in the fruit and vegetable industry.  Ten years ago the Federal Inspection Service inspected 198,075 cars. Last year it inspected 395,250 cars. In the concurrent development of the two methods the compulsory and voluntary use of Federal standards have promoted each other. This year marks the first meeting of compulsory and voluntary action in the case of a single commodity.

Extensively revised standards were recently promulgated for grain and cotton to meet the needs of changing production and marketing practices and to embody new knowledge.

The United States standards for cotton also serve as the universal standards for American cotton. Accordingly representatives of nine principal European organizations were consulted: in the revision of the standards. Leading representatives of American organizations of producers, manufacturers, and shippers were consulted also. The revised standards became effective in August 1936. They are more representative than the former standards of the characteristics of the cotton now produced and are more readily used. The number of grades is reduced from 37 to 32, and the number of standard boxes from 25 to 13.

Along with the whole question of what constitutes quality in cotton, methods are being studied for the further measurement of quality. New techniques are being devised and tested. They may permit further improvement in the standards.

The revised grain standards were drawn to meet changes in merchandizing, milling, other processing, and baking. All groups interested in grain marketing from the farm to the export wharf were urged to examine and test the revised standards before the: were promulgated. Somewhat less significant, but not less useful, revisions are being made in the permissive standards from time to time.

Farm products inevitably include wide ranges in quality.  Standards must change with significant changes in production practices.  Sometimes preferences and requirements of consumers vary decidedly in different markets. Changes in industrial technique or in methods of marketing may change the importance of certain quality factors or quality standards. New knowledge of nutritive values may upset previously formulated specifications of desirability, and new techniques for the measurements of quality may make improvements possible. It is, therefore, necessary to revise the standards periodically.

IMPROVEMENTS IN STANDARDIZATION

The first Federal standards were largely empirical, but in expert hands they served. As a basis for transactions between distant points, for a common trade language between farmers, dealers, and consumers, for market quotations, for price and market comparisons, and for agricultural financing and credit, they answered many vital wants. But research and experimentation in the Department steadily improved the standards and the methods of applying them.  Methods, instruments, and other apparatus were adapted to specific ends. Many public-service patents have been obtained for apparatus designed especially for grain standardization and inspection, and for other agricultural commodities. This year saw the conclusion of an exhaustive practical test of a new grain-sieving device Known as the Federal dockage tester, the making of new conversion charts for use with electric meters in determining the moisture content of Argentine flint corn and several other grains, and an improved refractometric method for determining the oil content of flaxseed. This method requires only a half hour instead of the 16 to 24 hours formerly required. In commodity grading much still remains subject to human judgment and skill, particularly in regard to such factors as flavor, body, and color in butter. But accurate measurements, through mechanical or chemical means, are steadily replacing the earlier empirical knowledge and ways.

These techniques are the results of laboratory and economic research supplemented by practical observation, The studies are frequently intricate but the resulting tests must be simple and practical.  As a general rule, the standards reflect the normal spreads in the market value of a commodity. The steps between grades correlate fairly closely with the price differentials that prevail in the market. Research is providing more precise measures of the price significance of separate quality factors. Some quality factors that affect prices, however, may not yield to statistical measurements, and it is necessary then to rely on observation and judgment.

The relationship between the grades and market price differentials does not remain constant necessarily. Price spreads between grades of a product frequently reflect the proportions of the product that fall within each of the grades. There are other influences. Buyers’ opinions as to value do not always correspond to intrinsic value. Before the Federal standards were adopted, for instance, “pea-green color” was the quality factor in alfalfa hay that commanded a premium, Research disclosed that the feed value of alfalfa hay correlates more closely with its leafiness. Then the factor of leafiness was given greater emphasis in the standards. Steadily increasing premiums paid for leafy as compared with pea-green alfalfa apparently reflect the influence of the revised standards. Present studies give special consideration to the carotene or provitamin content of hay.

Naturally, standards have limitations. They cannot meet all requirements. Some believe they are too general, and do not adequately measure variations in quality. This difficulty often lies in the products. As research yields more accurate measures of quality factors, the descriptive standards will become more precise.

Sometimes the margin recognized between the upper and lower limits of some grades may seem to be too wide and may not adequately reflect qualities peculiar to the products of various regions.  But the national grades have to serve the national industry. It is impracticable to narrow them so as to cover all gradations in quality. Regional characteristics that have market value may be covered in additional local notations. It may prove desirable for some commodities to have different sets of standards for different stages in marketing. Special consumer grades may sometimes be practicable for retail use.

CONSUMER INTEREST AWAKENED

In fact, an outstanding recent development has been the awakening of consumer interest in commodity standardization. Led by informed and organized groups, the consumers’ voice increasingly demands grade specifications that can be used in making household purchases, and truthful and informative labeling based on these grades. Consumers have a right to know what they are buying. The Federal standards for meat are adapted to consumer needs, and the Federal labeling of meats by grade has had excellent consumer response. Beginning in 1927, in the first full year of this service, 28,000,000 pounds of meat were officially graded and stamped. During the last fiscal year 423,000,000 pounds were so graded and stamped. Originally only beef was stamped; now beef, lamb, mutton, sausage, and certain other meat products are included. Seattle in 1934 passed an ordinance requiring that all beef, lamb, and mutton sold within the city limits be graded and stamped. Schenectady, N. Y., has passed a similar ordinance.

The labeling of canned fruits and vegetables according to grade has made rapid progress. The movement has strong consumer support, and strong support among certain groups in the canning trade.  One large chain-store organization is using Federal grade designations on its pack of several fruits and vegetables and giving them national distribution. National advertisers, however, are reluctant to adopt uniform grade labeling. They fear that their brands will lose prestige. But brands do not give consumers the information they want. There is no reason, moreover, why both the brand name and the grade designation cannot be used on labels. The Federal standards for butter, eggs, and certain kinds of poultry are suitable for consumer use. Labels based on these grades are coming into retail use.

Possibly the next line of decisive progress will be in the greater use of Federal grades by consumers. That may require the development of special grade specifications or descriptions.

HOME ECONOMICS

Letters that pour into the Bureau of Home Economics indicate that the American public has turned “consumer conscious.” Men as well as women are asking daily for help in planning budgets. They want to know how to get the most for their money, no matter how adequate or how limited their income. The economic situation of recent years has made families at all levels of living conscious of the need to budget their resources, to buy wisely, and to save. This is true of heads of families and of single men and women whose letters indicate a good educational background, but it is equally true of those whose letters indicate that their educational opportunities have been meager. It is true of families who are trying to adjust to the budgeting of incomes of $5,000 to $6,000 a year when they formerly were distributing very much larger amounts for family needs, and also true of families who are trying to make ends meet when the total resources consist of less than $60 a month from work relief.

The solution of such problems must come in part through study of the spending habits of American families. Yet there has never been a comprehensive study of American consumption habits and needs. For this reason the Bureau of Home Economics is now cooperating in such a study, which has been launched under the Works Progress Administration.

When the Emergency Relief Appropriation Act of 1935 was passed. proposals to undertake a study of consumption habits as a Federal Works project were submitted jointly by the National Resources Committee, the Bureau of Home Economics, and the Bureau of Labor Statistics, the latter Bureaus constituting the administrative agencies. The study of consumer purchases was approved by the Works Progress Administration in December 1935. Methods for collecting, editing, and tabulating the necessary data were developed cooperatively by the Bureau of Home Economics, the Bureau of Labor Statistics, the National Resources Committee, the Central Statistical Board, and the Works Progress Administration.

The work of selecting a staff and of setting up regional and local offices in 27 States was begun in a preliminary way in January 1936.  The field work, begun shortly thereafter, is now nearing completion, and statistical pools are engaged in tabulating the data. Information has been collected from about 50,000 families interested in cooperating to the extent of giving facts about their income, about the age and occupation of their members, and about the commodities and services they buy. About half of these families have given more detailed information on their expenditures for housing, food, clothing, transportation, medical care, and various other types of goods and services, and on their savings. In addition, from a smaller number of families, detailed information has been obtained on the kinds and quantities of food, household equipment, furnishings, and clothing procured.

Families living on farms, in villages, and in small city areas are Cooperating with the Bureau of Home Economics. City families are Cooperating with the Bureau of Labor Statistics. When all of the facts are consolidated we shall know for the first time what typical American families actually buy and what kind of living they get.

The cooperating families represent different occupations and family incomes ranging from $250 up to $5,000 or more a year. The facts will typify living conditions in different sections and will show variations due to sited and city living.

Not only will the families profit who assist in the study but the findings will be valuable to all families who want guidance in budgeting. Consumers’ wants should eventually be met more satisfactorily because the information, when summarized and interpreted, will help farmers and manufacturers to produce with less waste.  Merchants will have a better guide to probable changes in consumer demand. The United States Chamber of Commerce requested such a guide a few years ago.

The social value of the study will be important. The public, and local, State, and Federal agencies concerned with public health and general welfare, will have new facts to show the prevailing levels of living in this country and to indicate the need for betterment.

VALUE OF DIET STATISTICS

Facts about what the public eats are indispensable in planning farm production and distribution. Such facts also have an important bearing on education in dietary problems. The general well-being of a people is largely dependent on the adequacy of their diet. Many families who now fail to get a satisfactory diet can have a satisfactory diet for the same expenditure if they will consider both nutritive value and cost in choosing their foods. In order to help them the Bureau of Home Economics prepared Farmers’ Bulletin 1757, Diets to Fit the Family Income. This bulletin discusses scientific principles of nutrition and food economics in nontechnical language.

During the past year, the Bureau analyzed the kinds and quantities of food purchased and the nutritive value of the diets of wage-earning families. The necessary records were collected by the Bureau of Labor Statistics, in conjunction with a study of the disbursements of families of wage earners and low-salaried clerical workers. About 2,500 records became available for this analysis.  As a result, extensive figures will soon be available on the kinds and quantities of food purchased by city wage-earner families in different sections of the country at different seasons of the year, and at different levels of expenditure.

The diets have been analyzed for their nutritive content and appraised in the light of dietary standards. A preliminary report of the work appeared in the July 1936 issue of the Monthly Labor Review. This report, with an analysis of the diets of nonfarm American families as shown by studies made during the last 20 years, was sent to the International Labour Office and to the health committee of the League of Nations in December 1935.

The quantity of all food purchased (on a per-capita basis) increases, as one would expect, with the expenditure for food. This was shown by classifying into groups the diets of all families studied, by $32 intervals adjusted to 1935 price levels. From a level of expense for food of $32 to $65 per capita per year to a level of expense for food of $258 to $290 per capita per year, the, increase in weight of food per capita as shown by this classification was almost threefold. Naturally, however, the percentage increase from one level to another was much greater at the lower than at the upper levels of expenditure.

For some food groups, such as the grain products, purchases increase relatively little as expenditures increase. Foods from the cereal grains usually are cheap in relation to their ability to assuage hunger. Hence, they appear, as might be expected, in generous amounts in low-cost diets. as well as in expensive diets. The conumption of milk increases rapidly with increasing expenditures at lower levels, but less rapidly after the pint-a-day level of condition is reached.

With increasing expenditure for food, changes in the quantities consumed of fruits and vegetables (other than potatoes and dried legumes) are very striking. The increase from the lowest to the highest level of expenditure is almost sixfold. Citrus fruits, tomatoes, and leafy, green, and yellow vegetables comprise about 40 percent of the total in each level of expenditure for food. These fruits and vegetables are mentioned especially because of their significance as sources of vitamins and minerals.

The increase in the consumption of lean meats and fish is almost threefold between the lowest and highest levels of expenditure, while the consumption of fatty foods almost doubles. Butter consumption increases almost five times, but the consumption of other fatty foods remains almost constant. Butter seems to ts used in addition to and not as a substitute for lard, bacon, salt pork, and other fats and oils.

The fourth of the nonfarm population that spends the most for food consumes about one-third of the milk, fruits, vegetables (other than potatoes and dried legumes), meat, fish, and eggs, whereas the fourth that spends the least for food consumes about one-sixth of those products. Differences in consumption at different economic levels In any one region are much more important than differences between geographical regions at any one level.

SOCIAL IMPLICATIONS OF THE DATA

The most frequent level of expenditure for food among the families from whom dietary records have been taken was found to be that ranging from $100 to $180 per capita per year (1935 price levels).  About half of the families were spending less than $130 per capita per year. According to 1935 prices, a minimum-cost adequate diet could be obtained with careful food selections for just about $130 per capita per year. The inference is that the diet of half the non-farm population probably fails to provide a desirable margin of safety, Over minimum requirements. At the lowest levels of expenditure for food the calorie intake is far below the average for the population and far below the probable need; one need not, therefore, be surprised to find retarded growth in children and undernutrition in adults.

On the other hand, the figures shown for families spending the larger amounts for food probably represent quantities available to the household rather than quantities actually eaten. They include considerable household waste. Hence the quality of the diets of the higher-income groups depends on how much and what is wasted.  Calorie for calorie, the food supply purchased by families spending the largest amounts for food is only slightly higher in proteins, minerals, and vitamins than the diets of low-income groups. But if the milk and vegetables and fruits purchased are almost completely consumed, while waste occurs principally in the fats, sugars, and, grain products, the food actually eaten by the higher-income groups may be considerably richer in minerals and vitamins than the diets of low-income groups.

The percentage of the calories purchased in the form of grain products is much higher in low-income groups than in the higher income groups; it ranges from more than 40 percent in the lowest level of food expense studied to somewhat less than 30 percent of the calories at the highest level. An opposite trend may be observed for most other groups of foods. The percentage of calories derived from milk almost doubles as the expenditures for food increases, and the percentage derived from lean meats, fish, and eggs increases significantly.

Further study of these consumer purchases will furnish more authoritative figures on food-consumption habits and on food expenditures. It will show, for example, how food-consumption habits may vary among families spending the same amounts for food, but representing different socioeconomic groups. It will also provide figures on the proportion of the native-white families of each type that represent different levels of food expenditures.

There is widespread interest in these data, not only from the standpoint of science and social welfare but also from the standpoint of the economic implications. The governments of many nations, as well as international and national bodies of economists, educators, and others interested in social and economic planning, are giving much attention to these problems.

COMMODITY EXCHANGE ADMINISTRATION

To improve and protect the means furnished by properly conducted futures-contract markets for the hedging of price risks by growers, dealers, and processors of essential agricultural products, the Grain Futures Act of 1922 was strengthened by amendment on June 15, 1936. It was extended to cover cotton, rice, millfeeds, butter, eggs, and potatoes, and the short title changed to the Commodity Exchange Act.

The principal amendments include the following:

That commission merchants and brokers executing orders for customers in a contract market shall register with the Department of Agriculture and shall keep adequate accounts and records, which shall be available for official inspection; that copies of all bylaws, rules, and regulations adopted by contract markets shall be filed with the Secretary of Agriculture and their books and records be made available for inspection; that operators of warehouses from which any commodity is made deliverable on futures contracts shall keep such records, make such reports, and permit such visitation as the Secretary of Agriculture shall require; that, when so directed by the Secretary, each contract market shall provide for a period, after trading for future delivery in any delivery month has ceased, in which to make settlement by delivery, such period to be not less than 3 or more than 10 business days; that each such market shall require the party making delivery to furnish the party receiving delivery written notice of the date of delivery at least 1 day prior thereto; that deliverable commodity grades must conform to United States standards, if such standards shall have been officially promulgated; that receipts of federally licensed warehouses, as such, shall not be discriminated against in deliveries upon futures contracts.

Provisions of importance to cooperatives are that no contract market shall forbid the payment of patronage dividends by a cooperative association to bona-fide members; that a properly qualified cooperative association shall not be excluded from membership in and trading privileges on a contract market unless such exclusion is authorized after notice and hearing before the Commodity Exchange Commission, except for failure to meet its obligations with the clearinghouse of the exchange; and that cooperative associations of the federated type are authorized to compensate on a commodity-unit basis their regional member associations for services rendered, provided such compensation is distributed as a dividend on capital stock or as a patronage dividend out of net earnings or surplus of the federated association.

Special protection has been thrown around the margin moneys of the customers of futures commission firms. The act requires all futures commission merchants to treat and deal with all margin moneys, including securities and property, as belonging to customers. Such funds must be separately accounted for and may not be commingled with the funds of the commission merchant or used to margin the trades or contracts or extend the credit of any person other than the one for whom the same are held.

The danger of excessive trading by individuals or allied groups is also given special attention. The Commodity Exchange Commission has wide discretion in fixing limits for speculative trading whenever it appears that such limits are necessary. Ample latitude for hedging is carefully preserved.

Fraudulent trading is made more hazardous. Criminal penalties may be imposed for various offenses, such as conducting a bucket shop, speculative trading in excess of a limit fixed for such transactions, the manipulation of prices, engaging as a futures commission merchant or floor broker without prior registration, trading against customers’ orders, dealing in privileges, making wash sales and cross trades, and fictitious trading.

During the past year three cases pending under the Grain Futures Act of 1922 were dismissed following decision of the Circuit Court of Appeals of the Seventh Circuit that the law did not apply to past offenses. This defect in the original law has been remedied in the amended act, which provides penalties for any person who has Violated the act as well as for any person who is violating the act.

COOPERATIVE EXTENSION WORK

The cooperative agricultural extension system operates in two principal fields of service: (1) It mobilizes Federal, State, and county facilities for helping farm people to solve their ordinary problems of production ad marketing, homemaking, and country-life improvement. (2) In great national emergencies it tackles the resulting special problems. In the last few years it has taken an active part in the administration of production-adjustment programs; loans to farmers on stored crops; drought-relief measures; programs for the prevention of soil erosion; programs for debt adjustment and farm- credit improvement; and rural rehabilitation and relief.

In advancing these programs and activities the extension agents directly represented the Federal and State agencies. They acted as advisers and assistants in the organization and_ educational work, and functioned also in an administrative capacity in cooperation with local committeemen and producers’ groups or associations. The county extension offices were the centers where committeemen and extension agents gave practical help and necessary instructions.

Local committeemen assisted capably in the administration of the national programs, particularly in dealing with regulations, rulings, agreements, papers, and essential forms. They relieved extension agents of much detail work and enabled them to handle more efficiently their larger responsibilities. In many counties local committeemen handled most of the local routine involved in the national programs.

Both paid agents and volunteer leaders furthered the educational features of the extension programs. Without the help of local volunteer leaders the rural boys’ and girls’ 4-H club work would have suffered. Local leaders helped ae to conduct adult demonstrations and rural educational meetings. As a result farmers are coming to understand better how general economic conditions affect their individual problems. They discuss the effects of tariffs, quotas, price policies, price levels, currency measures, monetary systems, credit, taxation, and land-use policies. They are learning more about the interdependence of town and country and about the limitations of individual self-sufficiency. They are grasping the logic of group action in meeting emergencies. That agriculture is constantly changing and needs to make constant readjustments is now a potent conception in the rehabilitation of rural life.

The Extension Service aided farmers to take advantage of the agricultural conservation program inaugurated this year and to adopt other soil-improvement practices. It encouraged them to put land in better shape by seeding legumes for hay and for soil improvement, by sowing or treating pastures, by terracing, by planting cover crops, by strip farming, by listing, by building soil-saving dams.  Such work is going forward on a scale never approached before.

When drought became serious this year the Extension Service aided farmers in growing emergency crops and in making the best use of the feed available. Temporary silos were built by the thousands.  Feed-supply surveys were made and feed supplies budgeted. Exchange lists of feed were distributed. Feeds and emergency fodders were brought in from nondrought areas and distributed through central agencies.

Extension agents and local leaders cooperated with the regional agency set-up for clearing feed supplies. They helped farmers in pooling their orders so that they might obtain reduced freight rates.  They helped farmers to make applications for crop-production loans and feed and seed loans. In cooperation with the Agricultural Adjustment Administration, the Extension Service conducted State-wide corn-fodder and feed-conservation campaigns. Water sources were tapped.

COMBATING INSECT PLAGUES

Extension agents facilitated Federal and local cooperation in combating insect plagues. Thus in Illinois county agents were notified on June 8 that creosote would be made available by the Federal Government for building barriers against chinch bugs. At 9:30 the following morning orders for this Federal creosote were placed with the Federal purchasing agent. In all, 1,281,800 gallons were allotted to the 60 counties of the State where this pest threatened to do the most damage. About 10,000 miles of chinch-bug barrier were constructed in Illinois with the Federal creosote.

In areas affected by the drought, the consequences of which will be felt for years, the Extension Service is seeking with the aid of technical advisers to determine what the future farming program should be. It will encourage farmers to reorganize their cropping systems and to initiate different soil practices wherever the conditions of soil and climate warrant that course.

The farmers who have suffered are anxious for sound programs for both long- and short-time needs. They want the facts from which they may develop programs suited to their needs. The Extension Service recognizes the resulting responsibility. With recovery, and with time released from emergency projects, extension workers will not simply go back merely to old lines of work. New and larger problems demand attention, involving economic and social relationships as well as production factors. This calls for coordinated research and planning.

Accordingly, extension agents and research agencies are pushing a county agricultural planning project. After meetings with farm groups in every county it is hoped to develop’ recommendations for adjusting farm operations in terms of (1) national and international economic influences, (2) rational land use, and (3) farm management. Such recommendations should serve to develop county programs of the greatest significance.

City dwellers commonly think of farm life as synonymous with good food and health. Yet in some rural sections the problem of nutrition is acute. In certain areas some groups of farm people actually suffer from a lack of essential foods, though most of these foods could be produced there. The drought and the depression made this situation worse. Therefore the Extension Service gave more impetus to campaigns for growing and preserving food for home use, and the campaigns met with an extremely favorable response. County extension agents estimated in 1935 that the value of the food canned or preserved on farms in that year was $18,875,090.  Home-produced vegetables, milk, eggs, meat, and fruit now appear on the table of many a farm where formerly the idea prevailed that the purpose of a farm was merely to produce crops for sale. The farmer who makes a living on the farm will have that living and some cash besides. When drought and depression strike, the family’s living is surer and better.

The relief load was lightened, too, by the work done to produce food for home consumption in industrial centers. Thousands of gardens brightened mine settlements and industrial towns and helped to provide needed wholesome food. In one Eastern State the home-garden and food-preservation movement required the services of about 125 garden supervisors and 175 canning supervisors. Four and a half million pounds of produce was grown in these gardens. More than a million cans of high-quality vegetables were prepared for distribution by welfare boards last winter.

METHODS OF REDUCING LIVING COSTS

Extension programs developed to aid people in lowering costs of living were popular. In fact, extension work with farm families was marked by constant adaptation to the problem of lowered family incomes, unemployment, relief, and social welfare. Encouragement and instruction were given in producing handicraft articles and other things for sale. Making, remodeling, and repairing garments were taught.

Drought and depression and recovery have forced farm people generally to recognize the needs of a profoundly changing country life. They will continue to want help and direction in adjusting themselves to these changes. By study and planning, many things may be averted or their bad effects modified. By planning and acting in cooperation with the community, the State, and the Nation, farmers may make recovery more lasting. It is the task of the Extension Service to furnish the information and the organizational help necessary to accomplish this result.

COOPERATIVE RESEARCH PROJECTS

Federal and State agencies cooperated in new and extended lines of agricultural research during the year, and improved their organization for greater service to agriculture and the general public. As usual the State agricultural experiment stations worked closely with other State agencies, with local organized groups, with each other in regional groups, and with this Department individually and in regional and national groups in efforts to plan and coordinate research. Cooperative research thus fostered dealt not only with the adjustment and relief policies of the National and the State Governments, but with permanent policies of agricultural production, land use, and rural life. The Office of Experiment Stations examined and recorded 818 new or revised formal cooperative agreements between bureaus of this Department and the experiment stations.  The agreements covered 731 major research undertakings. All the State experiment stations and all but one of the Department’s research bureaus participated. There were also many informal cooperative agreements, some of them of major importance.

Certain regional and national cooperative research undertakings which had been started on an emergency basis as parts of the national recovery program in 1934 and 1935 were modified and expanded to meet more permanent requirements. These studies brought more closely together the parallel interests of plant- and soil-science research and those of crop- and animal-production research with more thorough consideration of their economic and social influences. Studies of adjustments in farming by regions and type-of-farming areas from the standpoint of national agricultural adjustment received considerable attention in this connection and were typical of the renewed and expanded efforts in cooperative research.  In this case, a review of similar work done the previous year indicated the need for more complete studies.

A general plan for further action was agreed upon by State and Federal representatives at the meeting of the Association of Land- Grant Colleges and Universities in the fall of 1935, and formed the basis of widely extended cooperative research in regional adjustment policies in 1936. Nearly all of the States cooperated in this important study. This Department contributed to the work primarily through the Bureau of Agricultural Economics, but also through the Agricultural Adjustment Administration, the Soil Conservation Service, and the Forest Service. Among the State experiment stations it was common to find from 5 to 10 subject-matter departments actively engaged in coordinating their studies so as to fit both State needs and the national adjustment study program.

Another significant development in cooperative research during the year was the adoption of a policy for establishing and operating regional research laboratories under the Bankhead-Jones Act of June 29, 1935. Following negotiations with the land-grant colleges and the State experiment stations this Department issued a statement of policy on December 19, 1935, which embodied suggestions from its bureaus and recommendations from the State stations approved by the executive body of the Association of Land-Grant Colleges and Universities. Among other things, the statement of policy provided, as a basis for the activities of the regional laboratories, that the Secretary of Agriculture will receive suggestions from the experiment station directors and from bureau chiefs in this Department; that he will locate such laboratories solely with regard to the technical requirements and the facilities available; and that the Depart- ment and the State experiment stations will enter into memoranda of understanding regarding the work to be done, the cost of doing it, the sources of the funds, and the coordination of the laboratory research with regular activities of the States and the Department.  Federal and State specialists will cooperate in preparing detailed plans.

THREE REGIONAL LABORATORIES APPROVED

In accordance with this policy three regional laboratories were approved during the last fiscal year; one for research in vegetable breeding; one for soybean research, with particular reference to the industrial uses of soybeans; and one for the study of grass breeding and pasture improvement. In the agreement covering the soybean laboratory, which is typical, 2 bureaus of this Department and 12 State experiment stations participated. It provides for integration of research at the laboratory with research at the experiment stations in the region and for the revision and reformulation annually of the research program.

The study during the year of grain storage on the farm is typical of the cooperative research into broadly important regional or national problems, initiated under the provision in the Bankhead-Jones Act or research by this Department other than at regional laboratories.  In this undertaking, three of the Department’s bureaus and seven of the State experiment stations, together with several other organized S[t]ate groups, cooperated in a manner which brought to bear on the problem the correlated knowledge and training of several different specialists. Besides avoiding duplication of effort, the arrangement avoided unnecessary duplication of research equipment.

Before the fiscal year ended, officials of this Department and a majority of the directors of the State experiment stations adopted a memorandum of understanding covering research relationships between the Soil Conservation Service and the stations. It recognized that effective cooperation in research by these agencies is primarily dependent on working to a common end, rather than on financing, and that each agency should contribute what it can in experience, knowledge, and personnel. It was agreed that such research as may be mutually agreed on with reference to soil erosion and its prevention requires mutual helpfulness, if it is to be fully effective. Accordingly, the memorandum provided that details of cooperative research projects within a State shall be planned and executed jointly by the State experiment station and the Soil Conservation Service.  This understanding has far-reaching significance because it recognizes not only the need of regional policies in erosion control but also the limitation of action by individual States and Federal bureaus.

Federal and State agencies cooperated during the fiscal year in a national survey of plant and animal improvement. This provided the basis for material published in the Yearbook of Agriculture for 1936 regarding the character and availability of superior germ plasm in 19 plants and animals, and preliminary material for subsequent work on other animals and plants. This cooperative study brought together in a usable form the available information on animal and plant genetics and exercised a favorable influence on the further planning of similar studies.

As part of an enlarged Federal-State program in the study of land utilization, land-use adjustment, and soil conservation the inventory of soil resources was expanded to include 30 States. In six other States the work was completed. The widespread cooperative efforts in crop improvement were continued and expanded. Typical of these were the forage-crop investigations which were extended to include 11 States; the work in 5 States was completed. Other similar, widely cooperative researches were the breeding and improvement of grasses, corn, and potatoes.

IMPORTANT NEW COOPERATIVE STUDIES

Cooperative studies on other agricultural problems included several important new undertakings, among them a study of milk marketing in New England, the development of a program of agricultural economics in New England, studies of tobacco and cotton diseases, an evaluation of meat investigations, and a master study on human nutrition.

At a conference in November 1935, sponsored by the directors of the interested experiment stations, plant pathologists engaged in tobacco disease investigations in the southern tobacco-growing States formed a permanent organization known as the Tobacco Disease Council. This council laid plans for a coordinated attack on particular problems by special groups composed of experiment station and Department specialists and including representation from a privately endowed university. A second conference, in June 1936, reviewed progress, took steps toward further voluntary coordination and cooperation along specific lines, extended the movement to more northern tobacco areas, and united it with the efforts of specialists on insect pests.

A similar conference, initiated by experiment station specialists with the cooperation of specialists of this Department on diseases of cotton, resulted likewise in the organization in February 1936 of a cotton disease council, with parallel objectives. As a result several serious disease problems of the Cotton Belt were taken up cooperatively by experiment station and Department specialists.

Food and nutrition specialists of several of the middle western experiment stations formulated a regional cooperative program of research on the nutritional status of college women. There is accumulating evidence of a relatively widespread chronic undernutrition among young women of college age. An executive committee has been appointed by experiment station directors to guide the work. The cooperation of the medical staffs of departments of hygiene and physiology has been enlisted.

FOOD AND DRUGS LAW ENFORCED

Artificially flavored and colored beverages which simulate genuine fruit products are frequently found to be in violation of the Federal Food and Drugs Act. Artificially colored, acidulated, and otherwise camouflaged products masquerading as bona-fide fruit beverages cannot fail to reduce the utilization and consumption of fruit. Operation of the Food and Drugs Act caused one manufacturer of an orange-oil-flavored beverage to change his formula to conform to the label, which indicated the presence of fruit juice. He began, in consequence, to purchase annually about 1,000,000 gallons of orange juice. This required some 10,000 tons of oranges. Previously the only orange product used in his beverage was orange oil.

In the spring of 1935 it became evident that maple sugar and sirup were occasionally contaminated heavily with lead. The contamination was traced to the use of sap buckets coated with lead alloy, and steps were taken to obviate this threat to health. But large stocks of the contaminated product were on hand. Investigations in this Department have suggested a simple procedure for the elimination of the poisonous contaminant. If this is successful, these stocks can be salvaged, and it will be unnecessary to divert thousands of gallons of the sirup and thousands of pounds of the sugar from food use, with consequent heavy loss to the producers.

One of the problems always before food and drugs law enforcement officials is that of the decomposition of foods. Procedures for the better preservation of perishable commodities and methods for the detection of unsound products, either in their raw state or as ingredients of food compounds, are very necessary. Research in the Food and Drug Administration constantly improves the technique.  The application of various methods of analysis specially developed by the chemist, the bacteriologist, and the microscopist, to detect unwholesomeness in foods, not only results in the necessary condemnation and destruction of spoiled products, but frequently suggests better methods of handling and storage.

The study of vitamins has practical applications in food and drug enforcement. More than 4,500,000 gallons of cod-liver oil were use in this country last year, of which approximately 95 percent was imported. There are no statistics of the respective proportions used for human consumption and animal feeding, but it has been estimated that more than half of this oil is used for animal feeding, mostly for poultry. Cod-liver oil added to poultry feeds yields profits under efficient poultry management. When there is a lack of sunshine it supplies the necessary vitamin D to obtain maximum growth and egg production.

Surveys of the vitamin D content of the cod-liver oils used in poultry feeds revealed that a surprisingly large proportion fall below the required standard for vitamin D. Some of the oils are practically worthless. Examinations of a number of importations indicated that a significant portion of the imported oils are deficient in vitamin D. Cod-liver oils are now being examined for their vitamin content before their entry is permitted. The detention of shipments pending vitamin assays means inconvenience and expense to importers, but it is the only way to assure the users that the product is of satisfactory quality.

LIVESTOCK AND POULTRY REMEDIES

Of particular interest to farmers is enforcement of the Food and Drugs Act with respect to livestock and poultry remedies. Annually many of these are found to be worthless. During the past year the Federal courts in three contested cases upheld the Government’s action against a contagious abortion remedy composed of cornstarch with a trace of potassium permanganate, which was sold for from $5 to $12 a pound; a protection powder labeled as a preventive for almost all the diseases of livestock and poultry, which consisted essentially of Glauber’s salt and baking soda, sold at $7.50 per hundred pounds; a poultry remedy composed of water, alcohol, carbolic acid, and potassium chlorate, at 75 cents per quart, labeled an effective treatment for all poultry diseases.

Enforcement of the Food and Drugs Act on these veterinary preparations prevents serious losses to farmers. The price paid for the fake remedies is not the only thing involved. More serious is the fact that reliance on ineffective drugs delays the application of the proper treatment and sacrifices animals that might be saved.

ROAD CONSTRUCTION

Road construction administered by the Department during the year included work on the main through highways, the construction of secondary roads reaching into farming areas, extensions of the main system into and through municipalities, the improvement of roads in Federal areas, and the elimination of railroad-highway grade crossings.

A total of 27,8783 miles of highways, roads, and trails, and 310 grade-crossing structures were brought to completion during the year. Of this mileage, 22,133 was improved with Federal funds administered solely by the Department. The remainder consisted of 204 miles of national-park roads built for the National Park Service by the Bureau of Public Roads; 2,319 miles of loan-and-grant projects of the Public Works Administration, also supervised by the Bureau of Public Roads; and 2,718 miles in work-relief projects, the labor on which was supplied by the Federal Emergency Relief Administration. Other costs connected with these projects were paid with Public Works funds, and supervision was furnished by the Bureau of Public Roads and several State highway departments.

The major activity of the Department in road construction consisted of the administration of funds provided as direct grants to the States for relief of unemployment through highway and grade-crossing work and as Federal aid to the States for highway purposes.  The work was carried on cooperatively with the various State highway departments in accordance with the general plan of administration of Federal aid for highways, but modified to meet the need of giving employment to those on relief rolls.

Work of this kind resulted in the completion during the year of 13,789 miles of roads and streets—7,355 miles on the Federal-aid highway system outside of cities, 755 miles on city extensions of the Federal-aid system, and 5,679 miles of secondary or feeder roads. On these classes of highways combined there were completed 310 railroad- highway grade-separation structures. Also completed were improvements on 22 miles of flood-damaged highways, on 236 miles of forest highways, and on 436 miles of highways through other public lands built by the Bureau of Public Roads, and 5,684 miles of forest roads and 1,965 miles of trails built by the Forest Service.

The current program at the end of the year involved a total of 25,812 miles in all classes of projects. It comprised 10,006 miles on the Federal-aid system outside of cities, 991 miles on city extensions of the system, 7,921 miles of secondary or feeder roads, 716 miles of forest highways, 261 miles of public-lands highways, 537 miles of national-park highways, 2,478 miles of loan-and-grant projects, and 2,902 miles of work-relief roads, the last three supervised by the Bureau of Public Roads as agent for other Federal departments. The current program also included 1,664 structures separating the grades between railroads and highways.

RAILROAD GRADE CROSSINGS

Authorization of $200,000,000 to eliminate danger at railroad- highway crossings under the Emergency Relief Appropriation Act of April 8, 1935, enabled the Department, for the first time, to participate in such work on a large scale with funds not subject to other demands for highway improvement. It has included in the program many urgently needed improvements not undertaken before because of hesitancy to spend large amounts of highway funds on a few structures. Approximately 2,000 crossings are to be eliminated with the new funds. Nearly 7,000 grade crossings have been eliminated with Federal assistance since 1916, but comparison with this figure does not give a fair picture of the value of the new work, because many of the new projects are of exceptional importance.

The work of the last year resulted in the elimination of 300 grade crossings either by structures or by relocation of the highway, the reconstruction of 10 existing structures, and the installation of protective devices at 185 additional crossings. Work under contract and approved at the end of the year will increase the number of grade eliminations by 1,466 and the number of protected crossings by 813.

  The total employment for the year on work supervised by the Bureau of Public Roads was 1,673,935 man-months, or the equivalent of an average full-time employment each month of 139,500 men. The number of individuals actually employed, some of them on a part-time basis, averaged approximately 195,000 persons per month. Indirect employment in the production and transportation of equipment and materials is estimated at one and six-tenths times the direct employment for work of the character done during the year. This resulted in an indirect employment of 2,678,000 man-months, and this added to the direct employment, gives a full-time employment of 4,352,000 man-months, the equivalent of the full-time continuous employment of 362,000 men.

SECONDARY OR FEEDER ROADS

Secondary or feeder roads have been receiving increasing attention from the Department. Actual participation in the construction of such roads began in 1933; 15,037 miles of secondary roads have been completed. Improvement of these roads is now a fixed policy of the Department. The general demand for better farm-service roads is reflected in the trend toward placing local roads under the control of State highway departments.

State and Federal highway officials must now plan for the improvement of secondary roads while they. continue to make needed improvements on the main highways and to carry on work in still another new direction—the improvement of main routes through and around cities. Highway administrators face a difficult situation if they attempt to plan for these different classes of work on the basis of the incomplete knowledge now available. Serious mistakes and set-backs to highway development can be avoided only by knowing the amount of each class of improvement that is economically and socially justified and what will be the annual cost of needed improvements. Plans must be based on a thorough study of highway revenues, the sources from which they come, and the fairness with which taxes for highways are imposed.

Recognizing the need for highway planning on a businesslike basis, the Department has invited all of the State highway departments to participate in State-wide highway-planning surveys to be financed with 114% percent of certain Federal highway funds and under specific legislative authority for the making of surveys and investigations for future work.

At the close of the fiscal year 40 States had indicated their desire to carry on planning surveys, and work was under way in 31 States. In these surveys data are being collected as to the highway mileage and its present condition of improvement, the extent to which each road is used, the extent to which various classes of residents use the different classes of roads, and the amount of taxes they pay for road purposes.

It is believed that the surveys will result in the assembly of facts necessary to the formulating of a definite, economically, and socially defensible, integrated highway-improvement program.

HENRY A. WALLACE,
Secretary of Agriculture.
NOTES & FOOTNOTES
1Excluding distilled liquors.